By factoring in an estimate for the net proceeds of the sale of Akuna Street [Akuna St tender decision] and other property sales, Council’s budget is showing a $8.9 million surplus for the coming year, but the Mayor and CEO warn it is not the time to be complacent.

The surplus is further buoyed by $1.7 million in budget cuts made from the draft budget. $281,000 in additional income was also identified by the executive, councillors and members of the Finance Advisory Committee.

Unlike in previous years, there were no last minute changes proposed to the budget at the June Meeting, which also approved the Community Strategic Plan, the Long Term Financial Plan and numerous other policies during its marathon five hour sitting.

“It shows how solidly councillors are behind the Strategic Improvement Plan [SIP - Strategic Improvement Plan has full support],” says Mayor Neil Reilly.

“It shows a determination to do something about our long term financial situation.

“This is the first of the actions that will have meaningful impact on our financial wellbeing.”

Without the asset sales, Council was looking at a $7 million deficit.

The long term financial plan still sees the Council sliding back into deficits, progressively increasing from $4.5 million in 2024/5, as further elements of the SIP cannot be incorporated into the figures until they are endorsed by Council.

The plan does incorporate early indications that it may not be necessary to pay off the whole of the Blue Haven TCorp debt of $45 million in 2023, as this aim was endorsed by Council on 23 May.

Council has begun negotiations to pay back $28 million received from ILU sales then, and take out a 10 year loan.

Blue Haven during construction - the cost blue out to $104.5 million

“Paying off the whole of TCorp in 2023 really hit the bottom line and made us cash negative very early on in the 10 years,” says the Mayor.

“By putting the SIP into action, we are improving our going concern status.”

The budget is based on a 2.5 per cent increase in rates this year, which has only just been approved by the Independent Pricing and Regulatory Tribunal (IPART) [2.5% rate rise approved].

While the budget for 2022/3 is described as austere, the cuts didn’t reach the $3 million that was foreshadowed when the draft was released.

“We cut about half of that, because if we cut any deeper we would be reducing services to the community and we didn’t want to do that,” says the Mayor.

“It is an austere budget necessary for the situation we find ourselves in.

“The long term financial plan gives us an indication of what is coming up over the horizon and an opportunity to prepare for that.

“If we make no changes to business as usual, it will result in a deficit budget sooner than we expect.

“By making adjustments now, we can create a different future.”

Despite curtailing new capital works, the Director of Engineering and Works Mike Dowd says, “Council’s $18.85 million capital budget includes significant allocations to programs to improve core Council services and also new allocations to support community resilience.”

These include more than $1 million for the renewal and improvement to buildings and facilities; more than $3 million to a significant Holiday Parks improvements; half a million dollars for stormwater and flood mitigation investigations and works; and almost $2 million for 25 roadwork projects.

Amongst other things, Environmental Services has money for delivering the employment lands strategy, the rural lands strategy and the coastal management plan.

“My aim in meeting with managers was a tightening of belts exercise rather than a stop a service exercise, because I understand that the community values its services,” says Ms Stroud.

As the plan does not include the sale of Blue Haven, it does factor in continuing losses from the business.

As CEO Jane Stroud says, “We are simply spending more than we have the capacity to earn. We do not have sufficient funds to continue to do exactly what we do without continued sales or divestment, reforms or change.

“It is the reality of the costs of the business outpacing the revenue.”

She warns that substantial asset management costs have still be added to the long term financial plan as they are still being calculated.

Mayor Reilly says, “We either have to sell more, spend less, bring in more income or make what we do more efficient.”

The NSW Auditor General’s report on council financial statements to June 2021, released last week, noted that Kiama Council was the only council where an audit has not been finalised. [Council's overdue audit noted]