Rates will need to rise by more than 42 per cent over the next six years to improve a deficit in Edward River Council’s general fund, according to an independent report on council’s financial stability.
The same report has found that council’s general fund is projected to produce a net operating deficit of $2.88 million in 2023/2024.
Its author, Graham Jarvis, proposes nine possible scenarios to repair the deficit.
Discussions at Tuesday’s council meeting centred around one of them - increasing rates by seven per cent each year for the next six years.
The Office of Local Government indicates Edward River Council’s rates are already far higher than neighbouring councils.
In the 2020/21 financial year - the latest data available on the OLG website - Edward River Council’s average residential rates charge was $1003.87.
This compares to $755.62 in Berrigan Shire, $317.52 in Murrumbidgee Council, $881.73 in Murray Shire and $660.55 in Hay Shire.
With the seven per cent a year increase option being well above the Independent Pricing and Regulatory Tribunal set rate peg, council would need to seek a special rate variation from IPART to implement the increase.
A decision on whether to make that application is expected to be guided by community consultation on council’s draft budget and operational plan over coming weeks.
But proposals put forward in the plan are unlikely to change without feedback from the community.
Tuesday’s discussion on whether to release council’s operational plan in its current form was lengthy, with some councillors raising concerns with the draft and others admitting difficulty understanding the documents.
Councillors Harold Clapham, Shirlee Burge and Marc Petersen voted against releasing the draft plan. Councillors Pat Fogarty and Shannon Sampson were unable to attend the meeting.
CEO Phil Stone said there are items within the plan that can be adjusted if council receives enough community feedback.
Director of Corporate Services Shelley Jones said, however, “the plan is the plan. What we are proposing is to develop some additional materials to help with the communication with the community over the next month.”
Mayor Peta Betts said the operational plan and budget and council’s long term financial plan were prepared in parallel with the financial sustainability report.
Local government budgets include a water fund, a sewer fund and a general fund, with Mr Jarvis advising Edward River Council should also have a separate fund for the Edward River Village.
The general fund is responsible for most council services excluding water, sewage and waste.
Roads, footpaths, parks, the swimming pool and council assets are funded by the general fund which comes from rates, grants, fees and charges.
Mr Jarvis said the review of council’s financial sustainability found the general fund is projected to produce a net operating deficit of between $2.5 and $3 million.
The deficit is likely to result in council not having enough cash to replace assets when they’re needed.
“Ultimately, your assets are likely to deteriorate going forward, unless you can somehow achieve grant funding,” Mr Jarvis said.
In a press release issued after the council meeting, Cr Betts said “the draft Long Term Financial Plan sees council return to a consolidated surplus from year two onwards, whilst preserving cash reserves”.
This is despite Mr Jarvis cautioning the general fund is separated from the water and sewer funds.
There is no projection of a surplus in the general fund within the next 10 years.
Mr Jarvis said anything council can do to improve growth would also help, by having more ratepayers to “spread the pain over”.
Deputy Mayor Paul Fellows asked Mr Jarvis if there was room for council to “massage the budget as we go along” through depreciation and government grants.
“Our caution is where the state and federal government budgets are at (due to stimulus provided during COVID),” Mr Jarvis responded.
“The probability of you getting grants like you have in the past is going to be less over the next five to 10 years.
“Depreciation is a poor indicator to plan on going forward. At this stage, the confidence you’ve got in your assets is not where it needs to be.
“You don’t use it (depreciation) as a budgeting tool,” he warned.
Cr Betts said the financial plans are based on growth scenarios and the investment and resourcing to support that growth.
“Council will need to attract skills to the region as an employer of choice, to ensure that we can deliver essential infrastructure to support increased industry and residential development,” she said.
Edward River Council’s population is currently in decline, with council advising tender documentation to engage a suitable consultant to develop a growth strategy is being prepared.
“The estimated completion date for the strategy is December 2023,” Mr Stone said in a written response to the Pastoral Times.
“Costs delivery will be known when the tender is awarded.”
The Deniliquin Business Chamber said it is also already working on several proposals that centre around business growth.
"The past few years have been difficult for our business community with drought, COVID and floods taking a heavy toll,” chamber executive officer Donna Taylor said.
“The increasing cost of living is also placing pressure on fixed overheads with many businesses feeling the strain from this.
"Deni Business Chamber understands that council's proposed increases will be opened for community consultation and we strongly encourage local residents and local businesses alike to provide honest feedback.“
Cr Clapham said it is now incumbent on the council to publicly promote the financial sustainability document and financial plans.
“We will need the public to comprehensively understand what this document sets out.
“I couldn’t support this plan as presented today,” Cr Clapham said.
The draft budget and operation plans are expected to be available to the public from Monday, until May 22.
Dates for community meetings are yet to be advised.
Councillors then intend to vote on the budget and operational plan at the June meeting.
Budget highlights:
• Total income of $33.585 million.
• Operating expenditure of $34.7 million, including $12 million in employee costs, $0.2 million in borrowing costs (interest repayments), $10.8 million in depreciation on community assets and $8.5 million in materials and contracts and $0.6million in other expenses.
• Capital works program of approximately $10.13 million, which includes $4.4 million on roads, $0.7 million building and facilities, $0.6 million on open spaces and recreational assets, $0.4 million waste management.
• $1.7 million of works on the Hardinge Street upgrade.
• Major infrastructure improvements (largely grant funded), including the upgrade to airport runway and the completion of the first stage of the Edward River Village.
• Finalisation of the growth strategy and the draft Long Term Financial Plan.