Central Coast Council expects to finish this financial year, 2020/21, with an operating deficit of $103.3M, which is a tick over $4M less than expected.
The good news came at Council’s May 25 meeting, when the third quarter (Q3) review of this year’s budget and operational plan was tabled with proposed adjustments.
The adjustments will move the year’s adopted budget from an operating deficit, excluding capital grants and contributions of $107.4M, down to $103.3M and the Q3 operating deficit dropped from $60.2M to $46.7M.
The year-to-date operating result excluding capital grants and contributions is showing an actual surplus of $34.3M compared to a budget deficit of $18.5M while if including capital grants and contributions, it is showing an actual surplus of $71.1M compared to a budget surplus of $11.4M.
The proposed Q3 capital expenditure budget adjustment is a decrease of $7.1M that will result in a revised 2020/21 full year capital works program of $163.2M from $170.3M.
Changes highlighted in the Q3 review included an overall reduction of $4.2M in operating income budgets.
Council saw an increase of $1M in user fees and charges at leisure centres, pools and holiday parks where usage and occupancy rates continued to out-perform budget expectations, but that was offset by other reductions, including in the Environmental Management Bio-certification scheme where forecast revenue will not be received in 2020/21, reduced tipping fee income due to reduced tonnages being received at waste facilities and reductions in theatre income forecasts as Council’s theatres have only recently returned to full capacity following Covid restrictions.
There was an increase of $9.4M in capital income budgets.
These included a $16.2M increase in capital grant income largely in Infrastructure services for road, bridges, shared pathways, drainage and traffic facility programs, but these were partially offset by reductions in non-cash contribution forecast income and a $3M reduction in S64 developer contribution forecast income.
Council reduced its operational expenditure budgets by $8.3M.
This included a $9.7M reallocation of budget for restructuring costs to other lines of the operating statement to mitigate the impact of unexpected and unplanned impacts such as unfunded storm and flooding costs from February/March 2021, external loan restructuring costs, reduced recovery of internal costs such as plant and fleet and tipping expenses due to reduced capital works program and non-receipt of bio-certification income.
Council reduced costs in materials and contracts and other expenses as a result of continued expenditure control.
It had a $1.1M increase in borrowing costs to recognise break costs and adjustment to interest budgets due to the early repayment of three sewer fund loans with a capital value of $15.5M.
Council said its focus continued to be on reducing expenditure, raising additional income, monitoring incoming cash flow, performing cashflow forecasts and ensuring a more sustainable cash preservation.
“Council’s Business Recovery Plan is a multi-faceted approach to address the current liquidity issues and introduce structural changes aimed at ensuring the longer-term financial sustainability of Council operations,” the report said.
Councils are required to prepare Quarterly Budget Review Statements, which present a summary of Council’s financial position at the end of each quarter.
It is the mechanism whereby the community is informed of Council’s progress against its Operational Plan and the budget, along with recommended changes and reasons for major variances.