Debt in the water
JOBS are on the line at the Rockhampton Regional Council where reduced revenue and increased costs have caused an $11 million hole in the existing budget.
As councillors meet this morning to sign off on a new austerity budget, Mayor Brad Carter has admitted
that council employees could be among the casualties as the authority scrambles to balance its books.
Some councillors said yesterday they felt uncomfortable about bringing down a new budget when there was so much uncertainty about the council’s finances.
But Cr Carter said they had a clear duty to inform ratepayers what they would be paying in 2011/12.
“These are the challenges of having to make a decision in the context of uncertainties around the impact of the floods on our revenue streams, such as water usage,” he said.
“It’s just a reality of life we have to deal with.”
Despite the shortfall, the council is expected to announce a rates increase today of less than 5% and will cut its cloth accordingly.
“We intend to run a very tight ship. There’s no capacity to increase rates during the year once the level is set. We could increase borrowings, but the preferred option is to tighten the belt by cutting projects and reducing services,” said Cr Carter.
“It might mean efficiency measures and reducing staff. That’s under discussion at this stage. It could mean asking for voluntary redundancies. I would not support compulsory redundancies.”
Cr Carter said the council would not replace some staff who left to take up positions elsewhere.
“In the past we have enjoyed a very stable workforce but we are starting to see people leaving to go to the mines and other organisations such as private roadwork contractors which have lost staff to the mines. This could give us an opportunity to reduce our numbers and our wages bill.”
Councillors were told yesterday that there was currently an $11 million deficit in this year’s budget.
In a sobering report strategic finance manager Alicia Cutler said income from general rates and water consumption was down and the delay in issuing the second rates notice because of the flood had cut income from interest. Increased spending on materials and plant as a result of natural disasters is weighing heavily. The cost of repairing roads has been well above the target.
She said it was becoming more and more obvious that various activities of the council were not able to remain within tightened budget guidelines set in January, during the height of the floods.
“More and more areas are finding it difficult to meet revised income expectations and it is now accepted that many of those areas will remain under their revenue budgets to the end of June. The cumulative effect of this will be substantial,” she said.
Cr Brett Svendsen said he hoped the bottom line would benefit from projected land sales but Cr Tony Williams said he was very concerned about the potential impact on income if there was another wet season.
In 2008, when the amalgamated authority was formed, its debt stood at $81.8 million.
It is currently $196.7 million but that is likely to increase again in the coming year.
“In 2010/11 we budgeted to be in a deficit position, which has substantially worsened as a result of the flood. Despite this we are still on track to be in surplus in 2013/14,” said Cr Carter.
The debt is $1319 for every resident in the region, but the council maintains it is manageable and necessary to pay for vital capital projects that will benefit the region for years to come.