Latrobe Valley residents could face their lowest rates increase in years, as Latrobe City moves to reign spending into a new era of “financial sustainability and constraint”.
A proposed three per cent rate rise headlines Latrobe City Council’s draft 2015/16 budget, coined as a delicate balance between maintenance and new capital works spending, forced largely by funding changes at the state and federal government level.
A ramp up of council’s maintenance regime, increasing the ‘asset renewal’ spend almost $2 million on 2014/15 levels, has emerged as a major selling point for the council budget as it moves to ‘future proof’ assets.
The proposed rate reduction, down from 3.9 per cent in 2014/15 and 5.2 per cent in 2013/14, comes as the new State Government enacts a pre-election promise to cap council rate rises at inflation levels.
Council’s current Strategic Resource Plan estimates have accordingly projected future rate rises to continue at 2.5 per cent until 2018/19.
Councillors will consider whether to release the 2015/16 draft budget for public comment at Monday night’s regular meeting.
Latrobe City mayor Dale Harriman said the State Government cap had a “huge impact on the budget”, and council had no choice but to review its spending regimes.
“We would have liked to have had higher rates, around the 3.5 or 4 per cent mark, but through good management and good budgeting we will be able to move forward with our current financial position, which in my opinion is healthy,” Cr Harriman said.
The combination of proposed rates and charges, set to bring in $71 million, and a capital income of $10.621 million, will contribute to an operating surplus of $11.962 million, falling to $1.684 million once non-recurrent capital funding and developer contributions are removed.
This surplus has been largely attributed to reductions in loan principal repayments through interest-only financing.
Meanwhile, no new borrowings have been proposed, with current loan principal repayments expected to total $2.36 million, bringing total borrowings to $18 million by the end of 2015/16.
Cr Harriman welcomed the budget’s increased focus on maintenance measures.
“Rather than maintenance costs blowing out further down the track, we are spending more now and saving a lot later. We are going to save 10-fold down the track here and that’s a good investment,” Cr Harriman said.
The $15 million in asset renewal expenditure includes more than $11 million for roads, bridges and footpaths alone, and $3.4 million towards renewal of council plant equipment and fixtures.
“The current general managers have said we need to improve the level of spending on our maintenance, and audits of Latrobe City assets showed we have not been making ground there, so this budget will help towards that,” Cr Harriman said.
However, he said tighter cashflows meant new capital works projects had to be postponed.
“It just means that this year there may be one or two projects that won’t be put on this year’s capital works budget.”
Successful recipients of new capital works spends include Moe’s Ted Summerton Reserve Oval resurfacing ($600,000), Moe tennis courts reconstruction ($350,000) and the Duncan Cameron Park Oval surface redevelopment ($350,000).
“Council has been in the middle of debating which capital works projects miss out, but our general managers have come up with the allocated list after much discussion,” Cr Harriman said.
“It’s tighter than what council would have liked, but there’s a lot of factors that have been outside our control. The uncertainty around preschool funding has put a million dollar hole in the budget.”
Latrobe City Council decided earlier this year to continue its Family Daycare program at current levels after the Federal Government failed to commit to a renewal of funding beyond 30 June.
“That’s something we’ve committed to keeping up with, but that’s extra money that can’t be spent elsewhere,” Cr Harriman said.
Councillor Graeme Mid dlemiss described the proposed budget as an “adjustment to a new financial reality”.
“The savings from what I can see have come from areas that won’t affect the public. I can see no reduction in services, and there are still significant capital works to occur, so I’m currently of the view council have balanced it rather well,” Cr Middlemiss said.
“It’s a fact of life that next (financial) year is going to be a tight year, which gave us the opportunity to review a lot of expenditure.
“It’s setting us up for a nice ramp down to more efficient spending, rather than a big drop, and has allowed us to look for any areas of fat to be trimmed, and improve the maintenance of existing infrastructure.”
Cr Harriman said he believed the proposed budget would go “some way” to restoring ratepayer’s faith in council’s ability to sustainably manage ratepayers money.