Draft 2016/17 Budget and Draft
2017-2020 Strategic Resource Plan
Title – 44pt
Date : May 2016
Proposed Budget and Strategic Resource Plan
Considered at the Ordinary Council Meeting held 18th April 2016
The key influences underpinning the draft 2016/17 Budget include:
•
Continuing to build a strong financial foundation, including
replenishing cash reserves and increasing working capital;
•
Working within a 2.5% rate cap;
•
$2M redirection from operating to capital;
– Including staff reductions
•
Balancing the need to invest in ageing infrastructure with the need to
deliver new infrastructure.
Key Challenges
– Reducing rate income forecast from 4.5% to 2.5%, a $633k reduction in 2016/17;
– Revaluation year;
– Maximising Grant funding opportunities;
– Restoring adequate cash levels;
– Long term transition from underlying deficits to surpluses;
– Aligning to community need;
– Continuing to provide over 100 services
– Maintaining and improving ageing infrastructure
– Major growth projections for parts of the Shire (services, infrastructure and
development liabilities)
Rates
2016/17 Charges
•
An average rate increase of 2.5% across the shire (exclusive of waste)
•
Municipal Charge
– Ensures that there is a uniform contribution to Council’s fixed administrative costs
– To increase from $299.00 to $302.70
– Set at 17% of total rates revenue
– Increasing the percentage would mean higher increases to low valued properties
– Decreasing the percentage would lower increases to higher valued properties
•
Waste Charge to remain unchanged for the third consecutive year at $305
* Please refer to Appendix B of the Draft Budget or the Rating Strategy for further information.
2016/17 Rate Categories
Differential Category
Factor
General
1.0
Vacant Land
2.0
Vacant Commercial or Industrial Land
2.1
Rural Agricultural Land (40ha-100ha)
0.9
Rural Agricultural Land (greater than 100ha)
0.8
Subdivisional Land
2.0
* Please refer to Appendix B of the Draft Budget or the Rating Strategy for further information.
Rate Revenue Distribution
•
Differential Revenue as a %
7.6%
2.0%
4.9%
General Land
Vacant Land
0.9%
Vacant Commercial or
Industrial Land (NEW)
7.9%
Rural Agricultural Land
(40ha-100ha)
76.7%
Rural Agricultural Land
(Greater than 100ha)
Subdivisional Land
*Excludes Municipal and Waste Revenue
Revaluation Year Impacts
• Average rate increase of 2.5% across the shire
• All land has been revalued within Mitchell Shire
• The valuation process is independent to Council
• Average property value increase of 4.8% across the shire
• Where property valuation increases are greater than 4.8%, a
higher than 2.5% rates increase will occur
• Where property valuation decreases below 4.8%, a lower than
2.5% rates increase will occur (a decrease in some instances)
$2M Efficiency Target
$2M in additional efficiencies
Increased Revenue
($554k)
•
$300K
Increased rate revenue due to additional supplementary rates 15/16
•
$254K
Increased user and statutory fees revenue
Increased Expenditure ($440k)
•
$440K
Depreciation increases compared to forecast
Reduced Operating Costs ($1.9M)
•
$1.107M
Employee cost reduction as a result of planned restructure in 2016/17
•
$300K
Removal of Grant to Nexus Primary Health
•
$129K
Reduced corporate expense (including postage, legal, and other administrative costs)
•
$134K
Insurance costs (policy renegotiation)
•
$70k
Community grants removed (1/2 of the 2015/16 allocation)
•
$66K
Utilities (new Procurement Australia contract)
•
$50K
Fleet costs (revision to fleet policy)
•
$50K
Efficiency gain resulting in reduced height & width costs
•
$10K
Reduced line marking service
$633k to align to Rate Capping
$633k to meet the rate cap (4.5% to 2.5%)
•
$150K
Strategic planning (timeframe of projects extended to 2017/18)
•
$70K
Community Grants removed (total $140k reduction)
•
$120K
Environmental Grants removed
•
$70K
Tourism Grants removed
•
$85K
Reduced operating hours at Customer and Library Service Centres
•
$50K
Reduced operating hours at Leisure Centres
•
$50K
Reduced asset condition audits
•
$38k
Reduction to corporate costs (legal, organisational development and
advertising costs)
Future budget impacts
•
To continue the efficiency agenda the following budget modifications will be
made,
•
– 2017/18
$2M reduction
– 2018/19 to 2023/24
$750k reduced annually
– 2024/25 to 2025/26
$500k reduced annually
Considerations that may influence the efficiency targets include
– Future EBA agreements and negotiations
– Additional rate revenue from growth
– Increased costs from new or expanded services
– Superannuation
– Emergency Events
Underlying Result
Underlying Result
=
Total Income
less one off capital grants and contributions and assets transferred to Council
less total operating expenditure.
* Please refer to page 32 of the Draft Budget for further information.
Maintaining our Assets
Target:
90 - 100%
Definition: Investment is assets to maintain current condition.
Note: Reduced renewal in 2019/20 is due to the expected need to construct Cell 6 at Mitchell Landfill, a
Community Centre in Newbridge, continued missing link footpaths program, as well as the construction of
new roads in the south of the shire.
Employee Costs
Actuals
2014/15
Employee Costs $'000
$
Increase % on previous year
Employee annual cost increase %
Employee cost increase $'000
Actual Increase / (decrease) $'000
22,674
Adopted
Budget
2015/16
Adopted
SRP
2016/17
$
$
-2.97%
$
-$
4.00%
935 $
694 $
23,349
24,719
Draft
Budget
2016/17
$
2.98%
5.87%
4.00%
907 $
675 $
4.00%
934 $
1,370 -$
22,820
-2.27%
4.00%
934
529
as a % of rates revenue
67.32%
64.85%
65.48%
59.97%
as a % of total expenses
41.09%
41.18%
41.51%
39.32%
•
Supporting over 100 services across the shire.
•
Award negotiations commence later this year.
•
2015/16 to 2016/17 removes 13 positions from structure, with 7-12 retrenchments
•
Future decreases may result as a direct impact of service reductions or cessation with future service reviews to be
undertaken.
•
Increases to employee numbers will only be approved when supported by community growth and service provision
needs.
•
Compared to Councils with like sized budgets Mitchell’s Management Structure is lean
Senior Management Comparison
Council
Total Income
Directors
Managers
Mitchell
$72.7m
3
8
Baw Baw
$88.9m
3
10
Mount Alexander
$32.6m
3
10
South Gippsland
$66.9m
3
10
Moira
$55.9m
2
12
Bass Coast
$72.4m
4
13
Macedon Ranges
$85.4m
4
13
Nillumbik
$88.4m
4
14
Surf Coast
$76.4m
3
15
$276.2m*
5
21
$278.0m
5
23
Hume
Whittlesea
• Budget data sourced from Draft 16/17 Budget except Hume which is sourced from 15/16 Budget plus 2.5%
• Director and Manager data sourced from organisational charts on Council websites or through direct contact
with each Council
Cash holdings
Cash holdings are required to meet the day to day operations of Council plus specific initiatives.
2014/15
Actual
$’000
2015/16
Forecast
$’000
2016/17
Budget
$’000
2017/18
Budget
$’000
2018/19
Budget
$’000
2019/20
Budget
$’000
Cash holdings
13,884
14,016
12,744
14,674
16,665
17,320
Min cash holdings
10,000
10,000
10,000
10,000
10,000
10,000
Restricted
reserves
3,453
5,280
4,344
4,824
5,304
5,784
Discretionary
Reserves
8,761
8,013
7,153
6,308
5,932
4,976
Minimum cash
required
22,214
23,293
21,497
21,132
21,236
20,760
Cash surplus /
(deficit)
(8,330)
(9,277)
(8,753)
(6,458)
(4,571)
(3,440)
Borrowings
•
Used to fund capital projects that could not otherwise be funded from ongoing income sources
•
Provide benefit across generations
•
Reliance will decline as cash levels increase.
Income
$’000
Average household
Council
Year
Balance
30 June
$’000
Loan
$’000
% of
Income
$79
$378
28.9%
$62,694
$19,204
4.4%
New Borrowings to fund projects including
2015/16 Forecast
13,492
2016/17 Budget
19,204
Land Purchase in the South
Seymour Flood Levee Land Acquisition and Planning Scheme Amendments
Mandalay Community Centre Stage 1
2017/18 Budget
20,296
Seymour Flood Levee Construct
2018/19 Budget
20,352
Newbridge Land Purchase (Council contribution)
Lockerbie North Community Centre Land Purchase (Council contribution)
Reservoir Road Kerbing
2019/20 Budget
19,584
Newbridge Community Centre (Council contribution)
Lockerbie North Community Centre Land Purchase (Council contribution)
Reservoir Road Kerbing
Highlights of the Capital Works Program
Mitchell Landfill, Hilldene
Tennis Court, Seymour
Highlights of the Capital Works Program
,
Highlights of the Capital Works Program
High Street, Seymour
Projects underway
Strategic Land Acquisition in South of the Shire
Early Learning Facility at Wallan Primary School
Hadfield Park, AAA Playground
Harley Hammond Oval – Stage 1
Broadford Leisure Centre Precinct Sports Pavilion – Stage 1
Kilmore Playspace – Hudson Park
Seymour Flood Levee – Stage 2
New Projects 2016/17
Land
•
Seymour Flood Levee – Land Acquisition and Planning Scheme Amendments
Buildings
• Mandalay Community Centre – Stage 1
Fleet and Plant Renewal
Building Internal Fit Out Renewal
Computers and Telecommunications
• Technology Upgrades and Integration
• IT Equipment and Hardware Renewal and Repair
Library Book Renewal
Roads
•
•
•
Various Gravel and Sealed Road Renewals
Various Shoulder Resheeting
Queen Street Upgrade (between Northern Highway and Windham Street)
Bridges
• Dropmore Road Bridge Replacement Works
New Projects 2016/17 continued
Footpaths and Cycleways
• Various Renewal Works
• New Footpath to link Nexus Health in Murchison St, Broadford
• Powlett Street Kilmore new Footpath
Drainage
• Collas Street, Seymour Drainage Renewal
• Industrial Lane Erosion Control
• Rupert Street Culvert Extension
• Hanley Crescent, Seymour Drainage Upgrade
Recreational, Leisure and Community Facilities
• Football Goal Post Replacement Program
• Harley Hammond Oval Renovation – Stage 2
• Lane Rope Renewal
• Skate Park / BMX Renewal
• Swimming Pool Renewal Works
• Tennis / Netball Court Renewal Program
• Power Supply Upgrade
• Sports Pavilion Kitchen Upgrade Program
• Greenhill Football / Netball Pavilion Upgrade
• Kings Park Netball Change Room Facility and Second Netball Court Construction
• Wallara Waters Community Facility, MCH and Kinder Design
New Projects 2016/17 continued
Waste Management
• Mitchell Landfill – Cap Cells 1-4
• Cap and Rehabilitate Seymour Closed Landfill Site
Play Space Improvement Program
Other
•
•
Broadford Pound Customer Transaction Facilities
Township Entrance Signage Upgrade
Submissions
Written submissions about the Proposed Rating Strategy, Budget and Strategic Resource Plan
have been invited
•
18th April 2016
Draft Adoption at Ordinary Council Meeting. Public Display
commences and submissions invited.
•
24th May 2016
Submissions close 5pm
All written submissions lodged with the Council will become public
documents available for inspection by the public in accordance with
the Act
•
6th June 2016
Submissions considered - 7pm at a Hearings Committee meeting
Any person making a written submission may request (in their
submission) to be heard in support of their written submission.
•
20th June 2016
Formal Adoption of the Budget, Strategic Resource Plan and Rating
Strategy.
QUESTIONS