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Special Rate Variation - 2012. Information for Residents. 22 November 2012. This Presentation. Background Rates SRV – what is it Council’s Finances What do they look like What has been done What are the Options What is the Process What are your thoughts and questions. Rates.

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special rate variation 2012

Special Rate Variation - 2012

Information for Residents

22 November 2012

this presentation
This Presentation
  • Background
    • Rates
    • SRV – what is it
  • Council’s Finances
    • What do they look like
    • What has been done
  • What are the Options
  • What is the Process
  • What are your thoughts and questions
rates
Rates
  • Rates are determined in accordance with the provisions of the Local Government Act 1993.
    • Provides the mechanisms to calculate rates and limits the income councils can derive from rates.
  • Council has 4 categories – Farmland, Residential, Business and Mining – with subcategories under those
  • Affected by land values and revals done every 3 years
rate pegging
Rate Pegging
  • Rates can only be increased each year by the rate peg amount – IPART determined – around 3% (inflation)
  • Can apply to IPART for a greater increase
  • SRV only applies to the GENERAL rate, not water, sewer, garbage
    • Separate funds with income only to be used for service provision and asset maintenance associated with each fund.
council funding
Council Funding
  • A $24m budget in total
  • About $2.7m in rates
    • Rates on Council properties – not collectable
  • About $2.5m in Australian Govt grants – untied
  • Other funds for specific purposes
    • Roads grants, weeds, emergency services etc
core council services
Core Council Services
  • Set up as Roads, Rates and Rubbish
  • Water and Sewer added
  • All other services are ‘extras’ that Council can choose to provide at request of community or other levels of govt.
    • Some are now legislated eg weeds, emergency services
  • Includes youth services, tourism, sport and rec, parks and gardens, health services, airports, emergency services and more.
council s rate income
Council’s Rate Income
  • $2.7m in 2012/13
    • $0.486m farmland (19%)
    • $1.067m mining (37%)
    • $0.27m business (10%)
    • $0.88m residential (34%)
  • 2012/13 major revaluations for mines
    • Farmland and residential rates fell
    • Mines rates received the brunt of the 3.6% increase
    • Mine rates increased significantly due to reval
who are some of the other 24 councils in our group
Who are some of the other 24 Councils in our Group?
  • Blayney
  • Bland
  • Walgett
  • Wellington
  • Liverpool Plains
  • Lachlan
  • Temora
  • Narromine
  • Oberon
how we compare group 10 councils
How we Compare- Group 10 Councils
  • Residential Rates 2009/10
    • Cobar $396
    • Group Av $474
    • NSW Median $660
    • 20% below group av
  • Farmland Rates
    • Cobar $1193
    • Group Av $1984
    • NSW Median $1834
    • 66% below group av
how we compare group 10 councils1
How we Compare- Group 10 Councils
  • Business Rates 2009/10
    • Cobar $676
    • Group Av $987
    • NSW Median $1841
    • 46% below group av
  • Mining Rates
    • Can’t compare within group
    • Rate in the dollar low and fell last year to stay within the peg
why is a srv being proposed
Why is a SRV Being Proposed?
  • The auditor says we need to increase income and reduce expenses
  • The state government – DLG – is encouraging Council to apply
  • NSW Treasury currently looking at the financial sustainability of Council
  • It’s in our Financial Sustainability Action Plan that we report to DLG monthly
  • It’s in the LTFP
  • Unlikely to increase grant income significantly
what has been happening
What has been happening?
  • Council has been unable to balance the budget for the last two years
  • Operational costs continue to increase, including electricity and chemical costs
  • Cost shifting from other levels of government eg health services
  • Rate pegging and limited opportunities to raise income
council s finances
Council’s Finances
  • Council has been able to maintain an operating surplus each year bar the last 2.
  • Getting finances back under control
  • To remain sustainable, need to increase income and reduce expenses
  • SRV is part of the plan
asset management
Asset Management
  • Council has a vast array of assets to maintain, repair and replace.
  • Council does not have adequate resources to do so
  • This is the case for most NSW councils
  • Council should factor into the LTFP a figure for replacement of the assets over their lifetime and an annual replacement and renewal amount
what does the auditor say
What does the auditor say?
  • Last year there was no unrestricted cash (can’t meet non budgeted expenditure)
    • we now have over $3m in cash.
  • Previous year borrowed from water and sewer (2 of the last 3 years)
    • Now have separate fully funded reserves established
  • Council must ensure expenditure is kept within budget
    • Deficit reduced by nearly $1m this year from last year
  • Council is dependent on non rates income
    • Rates income is low compared to other councils
what does the auditor say1
What does the auditor say?
  • Council is not investing enough in asset repairs and renewal.
  • Of the $1.5m operating loss, Council had a $1.4m fall in value of works undertaken on state highways
    • Increase in plant hire rates saw the budget improve in 4th qtr last year
  • Borrowing costs higher
  • Depreciation increased due to reval of roads etc
what has council done to reduce costs
What has Council done to reduce costs?
  • All budgets have been tightened
  • There was a 12 month freeze on staff replacement
  • Few community donations this year
  • Centrelink Office closed
  • Seeking adequate reimbursement for the RMS front office
  • Seeking increased funding for Regional Roads
what has council done to increase income
What has Council done to increase income?
  • Sold 11 Becker St and other land on market
  • Develop VPAs, S94. S94A and s64 plans
  • Increased plant hire rates
  • Critically assessed all fees and charges
  • Do not believe there are any other income raising opportunities
other council actions
Other Council Actions
  • EOI for LBV
  • Taken out a $1m loan to improve cash position
  • Improving financial reporting processes and systems
  • Critically analysing project costings, such as RMCC works
  • Written off bad debts, chased income owing
  • Reduced outstanding staff leave entitlements to reduce the liability to Council
  • Created an Employee Leave Entitlement fund
options for a srv
Options for a SRV
  • Only one part of the puzzle
  • One off increase
  • Annual increase over a period of time up to 7 years
  • Different criteria – not yet released
    • Need for rate rise
    • Community involvement
    • Reasonable impact on ratepayers
    • Sustainable borrowing strategy
    • Implementation of planning documentation
what is being proposed
What is Being Proposed?
  • One off 25% increase in 2013/14
    • Rates to rise by inflation in future years
    • Includes 3% inflation (rate peg)
    • Can sustain current services
    • Funds to be used to cover operational costs of the swimming pool and some road maintenance
  • Annual 13% increase for 7 years
    • Includes 3% annual inflation
    • Funds used to cover the operational cost of the swimming pool, road and asset maintenance
    • Assets will be improved under this model
how will you be affected
How Will You Be Affected?
  • Cobar Residential – 25% One Off
    • 2013 Rate – $455 ($114 per quarter)
    • 2014 Rate – $571 ($143 per quarter)
    • 2020 Rate - $682 ($171 per quarter)
  • Cobar Residential - Annual 13% increase for 7 years
    • 2013 Rate – $455 ($114/qtr)
    • 2014 Rate – $511 ($128/qtr)
    • 2020 Rate - $1063 ($266/qtr)
  • With CPI, rates will be $560 by 2020 ($140/qtr)
    • 23% rise from this year
what is the process
What is the Process?
  • Council has resolved to get community feedback on the two options
    • 25% one off
    • 13% annually for 7 yrs
  • Number of community forums to be held to inform and gather feedback
  • December Council meeting Council will consider which option to take to IPART
  • Application made early 2013
  • IPART reports about May/June 2013
  • Increase comes in from July 2013.
fact sheets
Fact Sheets
  • 3 Fact Sheets to take away
    • Rates
      • Get your rates notice out and see what your general rate is now
      • Do you know what your general rate was 10 yrs ago?
    • Special Rate Variation
      • Understand the two options and the impact on yourself
        • Are you happy to pay an additional $30 a quarter OR
        • Would you rather pay $266 a quarter to improve the services and assets in the Shire?
    • Understand the services Council provides and what they cost
survey
Survey
  • Please complete the survey and put in the box tonight
    • Provides data and information for Councillors to consider
    • Your preferences are included
    • Your say is important
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