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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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