Council told to strive to stay within budget
Proposed changes to its debt cap meant Gisborne District Council would have to work hard to stay within its operating budget, the finance and audit committee was told.
The committee adopted a staff recommendation for several changes to be made to the draft long-term plan that included increasing the debt cap from $50 million to $85m, then $105m — not to $80m then $100m as consulted on for the long-term plan.
Independent adviser Robert Hunter said given the forecast expenditure, it remained even more critical that the council stay within its operating budget .
Committee chairman Brian Wilson said the council would be conscious of that when it held hearings for the long-term plan.
Mr Wilson said what the council was doing in the paper it was considering was signalling the ramifications of the proposed changes.
The council was forecast this year to break even with the budget by year’s end (2017/18 year), so it would have opening debt levels, as planned for the LTP, for the first year of the plan (2018/19 year).
“However, there are carryovers, work not done but budgeted for.
“Normally you would expect that our finishing debt levels (17/18 year) would be lower because some work was not done.
“However, we have not managed to find enough savings to offset the funding needed to deal with the quite large deficit of the year before, so while finishing debt levels are as budgeted, there will be higher borrowings to fund the carryovers.
Mr Wilson said if the council had done some of the work, it would expect the debt to be lower.
Chief financial officer Pauline Foreman said the council had to reforecast the opening debt because of the adjustments.
There were other possibilities that might increase the debt, such as the landfill provisions and other movements with that.
The forecast end-of-year debt figure of $49.5 million was based on the number of projects to be delivered.
Because of the volume of work and what was forecast to be done, there was a movement in that forecast debt to $51.25 million.
Larry Foster said that the inclusion of an additional councillor from year two of the plan was saying that the council was actually approving this when it was subject to submissions to the representation hearings and possible boundary changes.
Mr Wilson said all this was doing was signalling the ramifications if an additional councillor was approved.
It was not pre-empting the process at all.
Mrs Foreman said this was not provisioned for at all.
Liveable communities director Andrew White said the upgrade of the Peel Street toilets had been omitted from this report.
Staff had been of the view that they would be completed this financial year but because of contractor availability, there was considerable risk that this project would not be completed this year.
They would try somehow to get that included in the carry- forwards for year one of the long- term plan.
Chief executive Nedine Thatcher Swann said this was giving the council a heads-up that what was shown in the paper might lead to revising the debt cap.
Mr Wilson said the wording of the recommendation said “proposed changes”.
It was not set in concrete.