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DRAFT
Annual Budget
Information Kit
Table of Contents
Information Kit Introduction
Mayor’s Summary
Chief Executive Officer’s Summary
Budget Highlights
Budget Timelines 2015/2016
Budget Process
Rates and Charges
Analysis of Operating Budget
Analysis of Capital Budget
Borrowings
Submission Forms
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Information Kit Introduction
Greater Shepparton City Council has prepared this kit to provide information on the Proposed
Budget 2015/2016. The kit aims to strike the right balance between providing clear and
concise information that meets the varied needs of a range of different audiences. This is a
particularly difficult balance to achieve in relation to the Budget and rates as they impact every
individual in the Greater Shepparton community differently and there are many complex
external and internal influences taken into account in the preparation of the Budget.
To reduce waste and minimise the impact on the environment, the Council has provided a
display copy of the “Greater Shepparton City Council Draft Annual Budget 2015/2016”
available for inspection during business hours, at the following sites:
• Council Office – 90 Welsford Street Shepparton
• Doyles Road Complex – 315 Doyles Road Shepparton
• Greater Shepparton Regional Library Corporation – 41 Marungi Street Shepparton
Copies of the documents can also be downloaded from the Council’s website at
www.greatershepparton.com.au
Any member of the community can make a written submission to the Council. Submissions
are to be received by Council by 5pm close of business Friday 29 May 2015. Submissions
should be marked “Proposed Budget” and addressed to Chief Executive Officer, Greater
Shepparton City Council, Locked Bag 1000, Shepparton, Victoria 3632, emailed to
[email protected] or made by visiting the Council’s website. The Council will
hear submissions commencing at 5.30pm Tuesday 9 June 2015 in the Council board room,
on the first floor of the Council office, 90 Welsford Street, Shepparton.
Page 1
Mayor’s Introduction
It gives me great pleasure to present the 2015/2016 Budget to
the community of Greater Shepparton City Council.
The Budget has been developed around the 2013-2017
Council Plan priorities and is in alignment with the five
Key Strategic Objectives of Active & Engaged
Community (Social), Enhancing the Environment
(Natural), Economic Prosperity (Economic), Quality
Infrastructure (Built) and High Performing Organisation
(Leadership & Governance) within this plan.
Council delivers over 150 services to the community through
various program, activities grants and projects which are
aligned to the Strategic Resource Plan and resourced by
the annual budget. Council must achieve a balance between
those services the community desires and the funds available, which is an ongoing challenge.
To achieve these goals, the Budget proposes an increase in total revenue raised from all
rates and charges of 4.95 per cent, excluding supplementaries, in the 2015/2016 financial
year. This level allows Council to maintain existing service levels, fund a number of new
initiatives and continue to allocate additional funds to renew ageing infrastructure. The rate
increase has been kept in line with the levels projected in Council's adopted Strategic
Resource Plan 2015/2016 to 2018/2019.
The total Capital Works program will be $41.01 million, of which highlights include:
- Cosgrove 3 landfill site design and construction ($6.18 million)
- Greater Shepparton Regional Sports Precinct ($9.24million)
- Verney Road Stage 2 - Hawkins St to Graham St ($3.32 million)
Renewal Works at the Aquamoves centre changerooms and car park ($2.49 million)
- Upgrade works to Drainage in Shepparton East ($1.01 million)
- Expanding the Regional Saleyards salepens and walkways ($0.82 million)
- Finance systems replacement ($0.82 million)
The Budget aims to position Council into a healthy financial position with the impending
uncertainty surrounding rate capping to be implemented in 2016/2017. Council will need to
consider strategies as part of its strategic resource planning to respond to the impacts of
reduced rate revenue including options such as reduced service delivery and reduced capital
expenditure.
This Budget was developed through a rigorous process of consultation and review and
Council endorses it as financially responsible.
Cr Dennis Patterson
Mayor
Page 2
Chief Executive Officer’s Summary
Council has prepared a 2015/2016 Budget which seeks to
balance the demand for services and infrastructure with the
community’s capacity to pay. Key budget information is
provided below about the proposed rate increase, operating
result, financial sustainability, cash and investments, financial
position and liquidity, capital works and Council expenditure
allocations.
Rates
It is proposed that the declared general rates and charges
revenue will increase by 4.95 per cent for the 2015/2016 year,
excluding supplementaries, raising total rates and charges of
$67.07 million plus $0.64 million generated from
supplementary rates and charges.
This rates increase is in line with the Council Plan 2013-2017 and the projections in the Council's
adopted Strategic Resource Plan 2014/2015 to 2018/2019.
Operating result (Operating surplus/(deficit))
The budgeted operating result for the 2015/2016 year is an operating surplus of $9.10 million, which
is an increase of $7.62 million from 2014/2015.
The major variance in the operating result between 2014/2015 and 2015/2016 is due to a reduction
in Materials and Services expenditure mainly due to Building Better Regional Cities - Mooroopna
West Growth Corridor rebates and Goulburn Broken Greenhouse Alliance Street Lighting Project
expenditure.
Cash and investments
Cash and investments are budgeted to decrease by $8.09 million during the year to $22.23 million
as at 30 June 2016. The 2015/2016 figure includes $16.50 million of investments classified as
Other Financial assets.
The decrease is due mainly to the higher level of capital works budgeted for 2015/2016 without a
similar increase in offsetting grants and contributions.
Financial Sustainability (Underlying operating surplus/(deficit))
The accounting underlying position should not be confused with a cash deficit. The figures include a
non-cash depreciation component in 2015/2016 of $22.64 million and excludes capital expenditure.
The underlying operating deficit forecast for 2014/2015 is largely impacted by Council's
commitment to the Building Better Regional Cities Mooroopna West Growth Corridor project and
the Goulburn Broken Greenhouse Alliance Street Lighting project.
Page 3
Financial Position (Liquidity)
Net current assets (current assets less current liabilities) are budgeted to reduce by $7.21 million to
$7.00 million as at 30 June 2016. The decrease in net current assets is mainly due to the
movement of cash and investments as detailed above.
Capital works
The budgeted capital works program for the 2015/2016 year is $41.01 million. Of the capital funding
required, $27.94 million, including $1.77 million which will be re-budgeted from the 2014/2015 year,
will come from Council operations, proceeds from asset sales, and cash reserves and investments.
$8.48 million will be sourced from external grants and contributions while new borrowings of $4.44
million are proposed for the Greater Shepparton Regional Sports Precinct.
Where are the rates spent – how every $100 is spent
Gavin Cator
Chief Executive Officer
Page 4
Budget Highlights 2015/2016
- Total income raised from Rates and Charges increased by 4.95 per cent (5.95 per cent
including supplementary rates).
- Implementation of Rating Strategy 2013-2017.
- Total Operating Revenues $126 million (excluding Capital).
- Total Operating Expenses $117 million (excluding Capital).
- Capital Works Program $41 million.
- Total Capital Revenue $11 million.
- $4.4 million of borrowings proposed.
Budget Timelines 2015/2016
The Local Government Act requires the Council to call for written submissions regarding the
proposed annual budget. This information kits pertains directly to the 2015/2016 Draft Budget.
Key dates:
Tuesday 28 April 2015
Friday 1 May 2015
Friday 29 May 2015
Tuesday 9 June 2015
Tuesday 23 June 2015
- Consideration of the draft budget at Special Council Meeting
- Public notice advertised and Budget available for inspection
- Public display and submission period closes 5.00pm
- Hearing of Public Submissions starting at 5.30pm
- Special Council Meeting at 5.30pm to consider the adoption
of the 2015/2016 Budget
Page 5
Budget Process
The key dates for the budget process are summarised below:
Oct/Nov
Dec -Feb
Mar/Apr
• Officers update Council's long term financial projections
• Officers draft operating and capital budgets
• Councillors consider draft budgets at informal briefings
• Proposed Budget submitted to Council for approval
Apr/May
• Public notice advertising inviting public inspection and submissions
• Updated the Strategic Resource Plan adopted by Council
May/Jun
• Submissions received are considered
• Budget and submissions presented to Council for adoption
• Adopted Budget submitted to Minister
Oct
Jan
Apr
• Budget Review Process - September Quarter Review
• Budget Review Process - Mid Year Review
• Budget Review Process - March Quarter Review
Page 6
Rates and Charges
Rating Strategy
The rating strategy was developed with community input via a Rating Strategy Reference Group,
public information sessions and a public submission process.
After its adoption in August 2013, Greater Shepparton City Council is entering the third year of the
four year rating strategy from 2013 to 2017.
The past two financial years have seen a gradual redistribution of the percentage contribution from
the various property classification groups. A review identified Commercial and Industrial ratepayers
were contributing up to three times the rate of the Residential ratepayers. Council adopted a
recommendation from the Rating Strategy Reference Group to reduce this to two times the
residential rate. This redistribution is now complete.
State Government fire services property levy
Through the Fire Services Property Levy Act 2012 the Victorian Government requires Councils
across the state to collect a Fire Services Property Levy on their behalf. The Government’s levy is
shown as a separate line item on Council’s rates notices.
All monies collect under this levy are passed on immediately to the Victorian Government.
For more information on the Fire Services Property Levy visit http://www.firelevy.vic.gov.au
Current year rates and charges
Greater Shepparton City Council’s rating structure comprises 13 differential rating categories plus a
cultural and recreational land rate. The different rates are structured in accordance with the
requirements of section 161 of the Local Government Act 1989.
Under the Cultural and Recreational Land Act 1963 , provision is made for a Council to grant a
rating concession to any ‘recreational lands’ which meet the test of being ‘rateable land’ under the
Act.
The following table summarises the differential rates for the 2014/2015 financial year. The figures in
brackets reflect the redistribution of the rates burden from Commercial and Industrial differential
rates towards the Residential differential, as detailed in the adopted Rating Strategy 2013-2017.
Type or class of land
Residential Unimproved Land
Residential Improved Land
Farm Land
Rural Residential Land
Commercial Unimproved Land
Commercial Improved 1 Land*
Commercial Improved 2 Land
Commercial Improved 3 Land
Industrial Unimproved Land
Industrial Improved 1 Land*
Industrial Improved 2 Land
Industrial Improved 3 Land
Cultural and Recreational Land
2014/15
cents/$CIV
0.00471460
0.00471460
0.00424314
0.00471460
0.00942920
0.01023069
0.00942920
0.00942920
0.00942920
0.00961779
0.00942920
0.00942920
0.00344166
2015/16
cents/$CIV
0.00497712
0.00497712
0.00447940
0.00497712
0.00995423
0.01080034
0.00995423
0.00995423
0.00995423
0.01015332
0.00995423
0.00995423
0.00363295
Change
5.6%
5.6%
5.6%
5.6%
5.6%
5.6%
5.6%
5.6%
5.6%
5.6%
5.6%
5.6%
5.6%
*Commercial Improved 1 Land and Industrial Imporved 1 Land provide the funding for Shepparton Show Me.
Page 7
Municipal charge
The municipal charge is the same fixed charge for every rateable property in the municipality and is
used to cover some of the Council’s corporate and governance administration costs. Applying a
fixed municipal charge ensures that all properties make a standard contribution towards the
Council’s administrative costs.
Type of Charge
Municipal Charge
Per
Rateable
Property
2014/15
$
238
Per
Rateable
Property
2015/16
$
250
Change
5%
Kerbside Waste Collection Service Rates and Charges
Kerbside waste collection services are provided in urban areas and rural areas abutting the sealed
road network. The charge for a waste/recyclables service is compulsory for all residential properties
in urban areas (whether or not the service is used) and optional in rural areas.
The waste service charges account for the various costs associated with the provision of waste
management services; including a recycling service, waste disposal and management,
development, rehabilitation and operation of the Council’s landfills in accordance with Environment
Protection Authority License, waste minimization promotion and education, management and
administration of the waste, recycling and green organic collection contracts and the provision of a
weekly kerbside waste collection service and fortnightly recyclables and organic waste collection
services.
The Council provides residents with a range of bin sizes to encourage waste minimisation and the
above service charges reflect these options. The Council continues to incur increases in the State
Government’s imposed EPA levy associated with the disposal of waste into landfill.
As part of the Greater Shepparton City Council’s Waste and Resource Recovery Management
Strategy 2013 – 2023 Council is investigating the provision of 360 litre recycle bins to provide an
improved recycling service to those residents who can demonstrate the need.
Type of Charge
Per
Rateable
Property
2014/2015
$
Per
Rateable
Property
2015/2016
$
Change
80L Waste / Recyclables Service Charge
166
168
1.2%
120L Waste / Recyclables Service Charge
222
224
0.9%
240L Waste / Recyclables Service Charge
368
372
1.1%
77
78
1.3%
77
78
1.3%
120L or 240L Green Organic Waste
Service Charge
120L or 240L Recyclables Only Service
Charge
(Note – Service Charges shown above do not include GST which applies to all service charges that are levied against non-residential or
non-rural properties.)
Page 8
Property Valuations
The valuations used for the 2015/2016 rating year for properties in the municipality have been
valued as at the common date of 1 January 2014.
The next revaluation of all properties has started and will be in place for the 2016/2017 and
2017/2018 rating years.
The revaluation is conducted by qualified valuers and updates the rating valuation of all properties
in the municipality to a more current level of value date, in order that rates levied are more closely
based on prevailing market conditions. Therefore, undertaking a general valuation on a regular
basis is a fundamental requirement for the maintenance of rating equity.
In certain circumstances, valuations must be performed between general valuations. These are
known as supplementary valuations. They are required when properties are:
· physically changed - for example, when buildings are altered, erected or demolished; or
· amalgamated, subdivided, portions sold off, rezoned or are affected by road construction.
Supplementary valuations bring the value of the affected property into line with the general valuation
of other properties within the municipality. Values are assessed at the same date of the general
valuation currently in use.
Supplementary valuations are undertaken at least once every quarter, and supplementary valuation
notices are issued accordingly. Rates and charges as levied on a ratepayer’s original Valuation,
Rate and Charge notice may be adjusted as a result of a supplementary valuation.
Page 9
Analysis of Operating Budget
• Total Revenue has increased by 5.6% and Total Expenses have decreased by 0.8%
which therefore improves Council's financial position and future sustainability.
• Total Operating Revenues $126 million (excluding Capital).
• Total Operating Expenses $117 million (excluding Capital).
The Budget outlines key programs and services for 2015/2016 as well as anticipated income
and expenses associated with service provision. The graph below reflects the level of funding
received against each revenue source as a percentage of total revenue. Council also
developed Program Budgets which can be found in Appendix E of the Draft 2015/2016 Budget
document.
Budgeted income 2015/2016
Statutory fees and
fines
1.9%
User Fees
13.8%
Grants - operating
17.2%
Grants - capital
6.0%
Contributions monetary
1.5%
Rates and charges
53.8%
Contributions - nonmonetary
2.4%
Other income
3.3%
As shown above, Council’s main largest source of revenue is from the collection of rates and
charges including supplementary valuations which contributes approximately 54 per cent or
$67.71 million of revenue for the 2015/2016 financial year. Rates and charges are collected
to enable the Council to provide effective and efficient services to our community, including
long term strategic capital investments through its capital works program.
Council will also receive 27.1 per cent or $34.09 million of its revenue from receipt of
operating (17.2 per cent) and capital (9.9 per cent) grants and cash and non-cash
contributions. This includes all monies received from State and Federal sources for the
purpose of funding the delivery of Council’s services to the community and contributions from
other parties towards property development costs.
Fees and charges account for 15.7% or $19.79 million of total revenue received. User fees
account for 14 per cent or $17.37 million and statutory fees 1.9% or $2.24 million. User fees
and charges are collected as a means of recovery of service delivery costs. Statutory fees and
fines are set by statute such as animal registrations, planning permits and some parking fines.
Remaining income streams include investment interest, rent and other revenue.
Page 10
The graph below shows the breakdown by expenditure classification as a percentage of total
operating costs.
Budget Expenditure 2015/2016
Bad and doubtful
debts
0.01%
Materials and
services
40.0%
Depreciation and
amortisation
19.4%
Net loss on disposal
of property,
infrastructure, plant
& equipment
0.5%
Borrowing costs
1.0%
Employee costs
39.1%
Staffing costs or employee benefits make up 39 per cent or $45.62 million of the total
operating costs for the 2015/2016 budget and include all labour related expenditure such as
wages and salaries and oncosts such as allowances, annual and long service leave
entitlements, employer superannuation and workcover costs.
Annual increases are as a result of a combination of factors including, a forecast enterprise
bargaining agreement increase of 3.05 per cent or $41 per week (the current enterprise
bargaining agreement expires on 30 June 2017), annual performance increments, recruitment
of staff to vacant positions and organisational growth of 1 per cent.
Legislation requires a Council to have an organisational structure and staff in place to
effectively manage the operations in accordance with the Council Plan. The Council’s existing
organisational structure is based on functional activity and common objectives in order to
meet the community’s needs, provide quality and efficient services, support the stimulation
and strengthening of the local economy and provide efficient and effective administration for
the organisation.
Materials and services account for 40 per cent or $46.68 million of total operating costs.
These costs are associated with the purchase of materials and consumables required to
deliver the many services that Council provide.
Other operating costs include depreciation, finance costs and the written down value of assets
to be sold throughout 2015/2016.
Page 11
Analysis of Capital Budget
• Total capital works program $41 million
• Renewal of assets $16.76 million (41 per cent)
• Upgrades to existing assets $4.35 million (10 per cent)
• New assets $18.75 million (46 per cent)
• Expansion of assets $1.15 million (3 per cent)
The graph below shows the capital works program by asset class and reflects the total
allocated in 2015/2016 as a percentage of the total capital works program.
Budgeted Capital Works 2015/2016
Property
13%
Infrastructure
77%
Plant and
equipment
10%
Infrastructure makes up the largest of the asset class allocation with 77 per cent or $28.60
million allocated in 2015/2016. Infrastructure includes Roads, car parks, footpaths, cycle
paths, bridges and culverts, traffic devices and signals, street lighting. Property has an
allocation of 13 per cent or $4.09 million. Property includes buildings and building
improvements on facilities like sports centres. Plant and equipment has an allocation of 10 per
cent or $4.31 million. Plant and equipment is primarily made up of information technology,
motor vehicles and heavy plant.
Highlights of the 2015/2016 Capital Works program include:
- Cosgrove 3 landfill site design and construction ($6.18 million)
- Greater Shepparton Regional Sports Precinct ($9.24million)
- Verney Road Stage 2 - Hawkins St to Graham St ($3.32 million)
Renewal Works at the Aquamoves centre changerooms and car park ($2.49 million)
- Upgrade works to Drainage in Shepparton East ($1.01 million)
- Expanding the Regional Saleyards salepens and walkways ($0.82 million)
- Finance systems replacement ($0.82 million)
Page 12
In order to deliver a robust capital works program the Council obtains funding from a number
of sources. The graph below shows the funding sources as a percentage of total capital
works program for 2015/2016.
Budgeted Total Capital Funding Sources 2015/2016
Grants
19%
Contributions
1%
Borrowings
11%
Operations, Reserve
Cash and
Investments
68%
Proceeds on sale of
assets
1%
Page 13
Borrowings
In developing the Strategic Resource Plan (SRP) (see Section 8 of the budget document),
borrowings was identified as an important funding source for capital works programs. In the
past, Council has borrowed to finance large infrastructure projects and since then has been
in a phase of debt reduction. This has resulted in a reduction in debt servicing costs, but has
meant that cash and investment reserves have been used as an alternate funding source to
maintain robust capital works programs. With Council cash reserves and investments
forecast to be $30.32 million at 30 June 2015 with a significant reduction in 2015/2016 to
complete current infrastructure works in progress, it has been necessary to consider the use
of borrowings.
For the 2015/2016 year, Council has decided to borrow $4.44 million to fund the capital works
program and therefore, after making loan repayments of $0.5 million, will reduce its total
borrowings to $18.3 million as at 30 June 2016. However it is likely that in future years,
borrowings will be required to fund future infrastructure initiatives. The following table sets out
future proposed borrowings, based on the forecast financial position of Council as at 30 June
2015.
Year
2014/2015
2015/2016
2016/2017
2017/2018
New
Loan
Loan
Borrowing Principal
Interest
s $’000 Paid $’000 Paid $’000
0
4,436
1,064
0
455
490
662
728
1,126
1,210
1,334
1,315
Balance
30 June
$’000
14,357
18,303
18,655
17,927
The table below shows information on borrowings specifically required by the Regulations.
Total amount borrowed as at 30 June of the prior year
Total amount to be borrowed
Total amount projected to be redeemed
Total amount proposed to be borrowed as at 30 June
2014/2015 2015/2016
14,812
14,357
0
4,436
(455)
(490)
14,357
18,303
Page 14
Submission Form
What do you think? 2015/2016 Draft Budget submission form
Submissions must be received by 5pm, Friday 29 May 2015
Your comments:................................................................................................................................................................
...............................................................................................................................................................................................
...............................................................................................................................................................................................
...............................................................................................................................................................................................
Name:......................................................Address:..............................................................................P/code:...............
Submissions will be treated in accordance with section 223 of the Local Government Act 1989. This means that copies of submissions
(including names and addresses of submitters) will be made available at the Council meeting at which the above proposal will be
considered. Council is also required to make submissions a public document. They will be available for public inspection for a period of 12
months. This information includes the personal information of the submitting party.
Submissions will be heard at the Public Council meeting to be held Tuesday 9June 2015
Do you wish to be heard by Council in support of your written submission?
(Please tick one)
Yes
No
If yes, please provide a daytime contact phone number so we can contact you to arrange a hearing time. Ph...................................................
Who will represent you?
Myself
Representative
Name:....................................................
Page 15