Central Coast Council has dropped its forecast budgeted operating surplus by $4M in its first quarter report for this financial year.
It has spent $10M less on capital expenditure than budgeted for and has saved $3.2M from employee costs mostly due to vacant positions which are in the process of being recruited.
The full year budgets for those vacant positions have been reduced in some cases to fund temporary contractor costs and to offset unfavourable budget impacts in other operating statement categories.
Borrowing costs were reduced by $4.8M in the first quarter.
“This mostly relates to loans that were repaid early in April 2021, after the original budget in the LTFP (long term financial plan) had been set,” Council said.
The first quarter (Q1) review of Council covers the period from July 1, 2021 to September 30, 2021 and shows how Council is travelling compared to its adopted operational plan.
Adopted adjustments move the Q1 approved operating surplus (excluding capital grants and contributions) from $7.0M to an operating surplus of $3.1M.
“As part of this Q1 budget review a conservative approach has been taken with forecast operating grant and contribution income and non-guaranteed income has been removed from the budget,” Council said.
“This includes ($6M) in contribution income, removal of uncertain emergency services levy contribution of ($1.1M), reduction in employer motor vehicle contributions ($0.8M), partially offset by confirmed environmental management, development assessment, road maintenance and open space grant and contribution receipts of $0.5M.”
The Q1 Report does not just focus on the figures.
It also measures the projects and actions Council approved in its yearly operational plan.
The good news is that more than 99.95 per cent of garbage bins have been collected on the scheduled day during the quarter.
In Q1, COVID restrictions saw more than 20 projects and actions put on hold or delayed while another 43 are on target and one completed.
Laycock St Theatre in Gosford had 19 shows cancelled and 28 postponed while the Central Coast Stadium is still awaiting the outcome from a Tender for Management rights.
A business strategy focussing on future requirements of Council’s holiday parks – pending approval from Council – is behind schedule and will be developed once the holiday parks manager role is filled.
A review of emissions reduction targets is on hold while Council undertakes a tender to establish a power purchase agreement.
Other projects went ahead.
The public exhibition period for the Draft Responsible Dog Ownership Policy closed on September 8 and the Policy is being amended in response and is tracking on time.
Also on track is a destination management plan now on public exhibition.
And 2,891 cubic metres of wrack were collected by September 30 from near-shore zones of Tuggerah Lakes.
Council is on target with its biodiversity strategy.
It has contractors to undertake bush regeneration and rehabilitation within priority bushland reserves and coastal ecosystems with about 10 per cent of the annual program complete.
It has established a Biodiversity Stewardship Agreement on reserves in Glenning Valley and is awaiting credit transfer and payment; and a policy for land acquisition has been started.
The progress of Woy Woy Floodplain Risk Management Plan draft report is scheduled for public exhibition in February 2022.
Council continued a wide range of waste avoidance and resource recovery initiatives resulting in a year-to-date diversion rate of 41 per cent; that is the percentage of domestic solid waste diverted from landfill.
A draft discussion paper and background paper on the Central Coast Housing Strategy has been completed and is being internally reviewed prior to community engagement being undertaken before the end of 2021.
Despite the report being adopted on November 23 and only one more council meeting scheduled before the end of the year, the project is listed as being on target.
Work on a Comprehensive Local Environment Plan continues with a detailed project management Plan prepared and consultant brief prepared.
The Q1 report says a consultant is to be appointed by the end of October (we’re now in December) to undertake land use assessment of Deferred Matter lands.
The Q1 report also tells us that Council is working on Character Statements for the northern part of the LGA: scope of works and methodology are being finalised.
A request is being prepared to engage consultants and a discussion paper being finalised ready for internal review.
The one project that has been delivered was the optimisation of the usage of the Baker Street Car Park for visitors to the Gosford City Centre.
The report said that due to COVID-19 restrictions, utilisation rates are an average of 10.46 per cent occupancy for the first quarter.
Adjustments adopted as part of the Q1 budget review included a reduction of ($5.5M) in operating income and an increase of $24.8M in capital income.
This included a $37.2M increase in Infrastructure Services for roads, bridges, shared pathway, drainage and traffic facility programs Water and Sewer infrastructure in Warnervale Town Centre and Gosford CBD.
It was offset by reductions of ($6.4M) in s7.11 contribution forecast income and ($6M) reduction in s64 developer contribution forecast income.
Council is forecasting a ($8.9M) reduction in recovery of internal costs from capital works, including plant and fleet and tipping expenses which have an unfavourable impact on the operating result.
It is forecasting a ($4.7M) net increase in contract costs and other expenses, mostly in the Waste Management unit as the CPI escalation allowed for in the Long Term Financial Plan (LTFP) was less than actual CPI escalation.
The Governance budget has reductions of $2M including the removal of the budget for the referendum that will no longer take place in 2021-2022.
Council spent $1.4M on consultants in the first quarter and $56,000 on legal fees.
The year to date (YTD) operating result (excluding capital grants and contributions) is showing a favourable variance of $12.2M, consisting of an actual surplus of $219.1M compared to a budget surplus of $206.9M.
The year to date (YTD) operating result (including capital grants and contributions) is showing a favourable variance of $12.3M, consisting of an actual surplus of $227.8M compared to a budget surplus of $215.5M.
Operating results often show a large surplus at the beginning of the financial year which will reduce as the year progresses as Council incurs expenditure.
Council said its focus continues 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,” Council said.
Merilyn Vale