Central Coast Council’s draft financial statements for 2019-2020 show that employee costs were the largest operating cost and that they are up almost 10 percent above budget.
Materials and contracts blew the Council budget by 18 percent.
The operating deficit before capital grants and contributions for the 2019-20 financial year is $88.7M, according to the draft figures which are yet to be audited.
The operating result, including capital grants and contributions of $66.9M, is a deficit of $21.8M.
The variance between the actual net operating result (excluding capital grants and contributions) of $88.7M deficit and the original budgeted net operating result (also excluding capital grants and contributions) of $18.6M, leaves a deficit of $70.1M.
Council’s user charges and fees came in at $14.4M less than expected, partly due to the Independent Pricing and Regulatory Tribunal (IPART) determination that lowered charges, plus lower demand ($3.1M) and the COVID-19 impact on leisure and childcare fees of $4.3M.
There was also a reduction in developer fees and tipping fees of $5.9M.
Council received extra operating grants of $5.1M which included additional funding of $3.5M for bushfire and flood events that occurred during the year, plus operating contributions of $1.7M for childcare services to offset the negative impact due to Covid-19.
It received additional capital grants and contributions of $8.8M, contributed and donated assets of $14M, partially offset by an unfavourable variance in developer contributions of $8.3M.
Actual employee costs were up 9.2 percent above budget.
“Employee costs remain Council’s largest expenditure type, representing more than one third of operational costs,’ the report said.
“The unfavourable variance of $18.6M in employee costs is largely attributable to budgeted salary savings of $16.1M not eventuating, together with increased overtime $2.4M, redundancies $0.5M and back pay $0.5M, in accordance with Council’s Unified Salary Scale.”
Materials and contracts were up 18.3 percent above budget.
The unfavourable variance of $18.2M is largely attributable to budgeted savings of $33.4M not being achieved despite savings in Contracts $8.7M, Materials $5.7M and Consultants $3.1M.
Increases in contractors / labour hire of $5.6M and external plant hire of $4.6M offset the benefit of the savings.
The rate and annual charges outstanding ratio, which is supposed to be below five percent, is up to nine percent, but Council says it is working proactively with ratepayers on financially affordable payment plans.
The draft 2019-20 consolidated financial statements do not yet include a formal audit report.
Once Council receives the formal audit opinion, the financial statements will then be updated to include the audit opinions and notice of a public meeting to be held on April 26, 2021, at which time Council can invite the external auditor, David Daniels of the Audit Office, or his delegate, to formally present the report.
Council applied to the Office of Local Government (OLG) for an extension of time to prepare and lodge the 2019-20 Financial Reports and has been granted an extension to April 30, 2021.