A second rating surplus in successive years will help the Whakatāne District Council keep rates costs down in 2014/15. In a report to the Council’s Audit committee on Wednesday, Acting General Manager Finance Philip Jones described the surplus of close to $43,000 for the 2012/13 financial year as an “important achievement”.
“This means that we set our rates for the past year at just the right level to cover the cost of the services we delivered,” Mr Jones said. “A deficit would have meant an extra rating burden for the community in 2014/15 to cover any shortfall in funding, so recording a surplus which was within 0.11 percent of our rating requirement was an ideal outcome for the District.”
He said the rating surplus reflected thorough and accurate planning and modelling, stringent management of budgets and a whole-of-Council focus on reducing costs and improving efficiencies.
A number of positive and negative variances contributed to the rating outcome, with a targeted rate deficit of close to $241,000 (largely due to lower than expected fees and charges for waste activities) more than offset by a surplus of $283,000 from general rates. That surplus arose mainly as a result of under-budget expenditure on new equipment in the Council’s information management activities.
Meanwhile, the Council’s overall financial position, which includes all expenditure and revenue, plus non-cash book entries such as depreciation, asset revaluations and gains or losses on the sale of assets showed a “paper loss” of just under $4 million. Mr Jones stressed that this outcome, which is reported to meet statutory requirements, does not have any impact on rates, or the Council’s overall financial health.
The largest factor contributing to that position was an unfavourable variance of close to $5.4 million as a result of year-end revaluations of Council properties. Other unfavourable variances included above-budget personnel costs (up $700,000, mainly because of additional aquatic costs) and under-budget total revenue (down $453,000, largely due to rates remissions). Positive influences partly offsetting those factors were a $1.8 million gain on the revaluation of financial derivatives, depreciation costs being $1.43 million under budget and a favourable variance in operating expenses $380,000.
In receiving the report, the Audit Committee passed on its congratulations to all Council staff for an “excellent financial performance”.
Speaking after the meeting, Chief Executive Marty Grenfell said the financial report, and the other non-financial results reported to the Committee in the unaudited draft Annual Report, can be attributed to the combined efforts of “a highly capable, professional and committed team of staff working to achieve desired outcomes for the community”.
“This is a clear indication that we are more realistic in planning, programming and budgeting for our projects and that we’re getting on with the job and delivering,” Mr Grenfell said. “We’re not a profit-driven organisation, but if we were, the Board and shareholders would be very pleased with these bottom-line results.”