Council deficit reduced by $7.7M

Chief Financial Officer, Natalia Cowley, Administrator, Dick Persson, and Acting Chief Executive Officer, Rik Hart, at the December 2 announcement

Central Coast Council’s total actual debt is now down to $458M.

Administrator, Dick Persson, had forecast a $565M debt in his 30-Day Report in December 2020, but Chief Financial Officer, Natalia Cowley, said at Council’s meeting on February 23 that the debt was now $458M.

Cowley tabled two reports updating the Business Recovery Plan and Council’s second quarter financial statements.

Her report explained that the Financial Tactical Team, convened to deal with the financial crisis when it became public in October 2020, would now be discontinued.

Work on finding financial savings would continue on a business-as-usual (BAU) basis.

This meant that Cowley’s report would be the final one to be provided to Council on progress against the Business Recovery Plan.

Jobs still to do on the BAU list include reviewing developer contribution plans and to model expenditure prediction with a view to minimising expenditure from general revenue as well as addressing all recommendations made in the Developer Contribution Audit and to ensure a clear strategy.

Work would also continue on reviewing historical spending to identify funds that may have been expended from incorrect sources, such as developer contribution-eligible projects that had been funded from general revenue.

Council will also create a property (land) register including details on the use and return on property, and assess the holding costs of all non-income producing assets and the current and future needs or strategy, including community expectations for maintaining the property.

Work continues on the forensic report.

The 2020-21 Q2 Business Report, which covers the progress of operational plan actions, targets and financial performance for the period July 1, 2020 to 31 December 2020, showed that the budgeted deficit had been reduced.

Remedial actions to reduce Council’s operating deficit continued, including a structural reduction in operating expenditure, reduced capital expenditure, bank loans, additional income and moving to sell underperforming assets.

Administrator, Dick Persson, said the community budget savings were continuing to be made, while delivering essential infrastructure and services.

“Good news is that all our hard work to find savings and rein in spending is working, with the deficit reduced by $7.7M,” Persson said.

“We are also recovering faster than expected from COVID-19 with an extra $3.3M in income from fees and charges from our holiday parks, leisure centres, pools and childcare centres.

“This is in addition to a reduction of $4.4M in operational expenditure, with reduction of materials, contracts and other expenses as a result of stringent expenditure control.

“The capital works program has been reduced by $53.3M to $170M a year, with priority given to essential services and delivering projects over several years.

“However, despite all of this great work, Council’s projected financial position at June 30, 2021, will still be unsatisfactory, with a current forecasted loss of $107.4M.

“So the hard work will continue to find the savings and deliver a balanced budget for next financial year.

“Hopefully we do get a Special Variation Rate from IPART so that we can pay back restricted funds and deliver the services that our community need and value.” Persson said.

Overall performance against the Operational Plan actions and targets shows that out of the 108 actions / targets, three have been completed, 67 are on track, five have not commenced, and 33 are either delayed, on hold or have been closed.

A number of these have been impacted by the financial situation.

Meeting, Feb 23
Media release, Feb 23
Central Coast Council