Budget Community Education Report.

By Nigel Waistell, Councillor for Division 1, Scenic Rim Regional Council

Questions to be Considered. 

  • How much revenue should be raised?
  • Should the cap system be used to manage rate rises?
  • How should revenue be expended?
  • To what degree should the community be informed on expenditure?

Budget Values 

The Council is required to prepare an annual budget in accordance with the requirements of Part 3 of the Local Government Act 2009. There are three relevant measures of financial sustainability that all Queensland local governments must report on and these are:

  • Asset Sustainability Ratio;
  • Net Financial Liabilities Ratio; and
  • Operating Surplus Ratio.

In my view, these measures translate into three values which should be applied to budgets:

  • Maintenance of Council’s financial sustainability. Expenditure must not exceed revenue and I believe that we should always maintain a cash buffer for the unexpected by underspending;
  • Maintenance of assets. The main assets are bridges, roads, footpaths and drainage. However there are other essential assets like parks and facilities which also need to be maintained.; and
  • Fairness and affordability.

Rates Structure 

Council has adopted a Differential General Rate Category structure. Properties have been placed in one of the following categories:

  • Residential Principal Place of Residence (category 1);
  • Residential Future Principal Place of Residence (category 1FPR);
  • Residential Non Principal Place of Residence (category 1NPR);
  • Multi-Unit Dwellings (categories 21 – 25);
  • Rural (category 9);
  • Commercial (categories11 – 19) ; and
  • Other (category 10 and 20).

Rates are then calculated based on two criteria:

  • A rate in the dollar for each category which is calculated by Council; and
  • Land values which are calculated by the Department of Natural Resources and Mines.

So for an example, a land value of $300,000 on a residential block which is category 1 which has a rate in the dollar value of $.007856 will have a general rate of $300,000 x $.007856 = $2356.80.

Rates also contain the following other charges:

  • Community Infrastructure Charge which is a flat rate levied on all properties.
  • Waste Management Charge for properties which receive a waste collection service;
  • Waste Disposal Charge for properties which do not receive a waste collection service;
  • Rural Fire Levy which is a flat rate levied on rural properties depending on which area you live in and which is distributed to the Rural Fire Service;
  • Emergency Management Levy which is a flat rate levied on all properties by the State Government, collected by Council and passed on to the State Government.

Properties which are connected to reticulated water and sewerage will also be charged a rate levied by Queensland Urban Utilities.

When determining the budget, Council sets rates to generate the same amount of dollars as the previous year plus the general rate increase. The aim of this is to generate some consistency in the amount of revenue to be collected which will allow for forward planning. An increase or decrease in land valuations does not mean extra revenue for Council but individual properties will see some change in the rates levied.

Rating Environment

Council’s rates and charges are set each year with regard to a number of factors including the cost of providing services, capital works and service level expectations by the community. Scenic Rim’s low population density means that it has a low rate base from which to raise revenues to maintain infrastructure and provide services.

Budget

The budget is split into two parts: Operational being the day to day services and Capital being new infrastructure

Operational Revenue 14/15

Operational revenue is provided from a number of sources:

General Rates $ ??
Community Infrastructure Charge
Waste Charges
Share of Profit from QUU
Recoverable Works
Interest
Fees and Charges
Federal and State Funding
Other Revenue ie Landfill

Operational Expenditure 14/15 

Operational expenditure is as follows:

Employee Expenses $ ??
Operational Expenses
Finance Costs ie interest on loans
Depreciation

The difference (surplus) between revenue and expenditure of $?.??m is transferred to capital expenditure.

Capital Revenue 

Capital revenue is provided from a number of sources:

Operational surplus
QUU Dividend
Proceeds from Sales of Property
Contribution from Developers
Borrowings
Capital Grants (NDRRA), Subsidies & Contributions
Depreciation from operational expenditure

Capital Expenditure

Bridge Programme
Roads Programme
Drainage Programme
Footpath Programme
Facilities, Parks and gardens Programme
Waste Management Programme
Fleet Management Programme
Strategic Projects
Other Projects

Revenue Strategy

It is difficult to find a revenue strategy which will suit all. The current system of rate in the dollar and land value is satisfactory except when a change in land value results in a high increase in rates. A capping system can even this out but, once a cap is in place, it should remain or else the generated increase is just stalled until another year. Should a cap system be employed?

Expenditure Strategy

Assets have to be maintained and services provided. However, some services are essential and others are desirable, depending on your view of life. Which services should be maintained? For an informed decision to be made, you need to know what that expenditure on services is. This operational expenditure of $?.??m is not divulged to the community or councillors in detail but only in totals and percentage spent. Should more detailed reports be provided?

Summary

The aim of this budget review document is to explain in simple terms how the budget is constructed and operated. There are questions which should be discussed and answered by the community.

 

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s