Bega Valley Shire mayor and CEO warn rate rises cannot be avoided

Warning bells on rate increases for Bega Valley

As council adopts its budget for 21/22 (the current financial year) there are warning bells sounding about its financial position in the next three years to 2025.

It is something that both existing councillors, who are re-elected, and any new incoming councillors must wrestle with, despite whatever protestations or promises they may make during electioneering.

From council's own figures while the figures may look better than expected at the moment, the numbers are sliding into dark territory particularly with respect to cash in the general fund in future years.

Council is just in the process of finalising its financial year figures to the end of June 2021 and mayor Russell Fitzpatrick said he thinks it will be better than the originally budget forecast.

That might be considered to be an understatement given that the general fund was expected to be a $15m deficit but council is now looking at $16m in the black according to Cr Fitzpatrick. Acting CEO Anthony McMahon said they were expecting all external reserves to be covered.

In fact the revised figures for cash flow in the general fund show $16.5m coming into the fund at the start of the current financial year and it begs the question as to how it has been achieved.

"We have reduced the capital spend particularly for (water) treatment plants," Mr McMahon said.

Council has also reviewed the externally restricted funds to see where some money might be able to be used in broader categories, particularly for funds that may have been sitting there for some time, Mr McMahon explained.

While the $16.5m incoming cash to the 21/22 general fund sounds good, it diminishes to $5.7m at the end of this financial year. More worryingly it starts to head south in 2023 with a deficit of $4.9m, a deficit of $11.6 at the end of 2024 and a deficit of $23.1m by the end of financial year 2025.

These are, of course, estimates but are based on current known income and costs.

"We can't continue to do everything we are doing with the current amount of money," Mr McMahon said.

Cr Fitzpatrick believes a rate rise cannot be avoided otherwise assets funded by the general fund will have longer between maintenance and start to slide into disrepair.

And while this may prompt the reappearance of the spectre of the swimming pools Special Rate Variation, Cr Fitzpatrick doesn't believe an SRV is the right way to go. He sees a straight rate rise which would feed into the general fund as a better way of dealing with the financial issues.

But he does believe there is room for manoeuvre by offsetting part of a rate rise with a reduction to water or sewer costs.

"If there are no rate rises every service will get wound back and that means jobs will go too," Cr Fitzpatrick warned.

This story Warning bells on rate increases for Bega Valley first appeared on Merimbula News Weekly.


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