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Tuesday
Feb082011

Board Struggles

The Community Board met yesterday, and struggled to come to terms with the many demands being placed on its limited finances.

Unfortunately, it took the easy way out, and rather than simply acknowledge that there is no money, it dipped into old faithful - the TUGPRA  Account, and "retained earnings" - a clear indication that Councilor McLean has convinced Council that the 150% of revenue borrowing limit is unrealistic, and needs to be "adjusted". See my  post to follow on the paper – “Developing the Financial Sustainability Strategy”, that was presented to Council last Thursday.

(If there is any demand (please e-mail or comment) I will post the paper in full – it makes frightening reading, and every ratepayer deserves the opportunity to see just what is proposed in this regard.)

Retained earnings are fine, unless you have fully used up your reserves through internal borrowing, and then retained earnings are a “paper” asset only, and drawing them down simply increases borrowing – this is a concept with which our new councilors appear to have some difficulty. They decided, when faced with a $150,000 bill to repair the Rhodes Park netball counts to use these same “retained earnings”. In fact, I can see that the $600g. in the Thames “Retained Earnings” account is about to disappear like a snowflake in autumn. 

The need to find another source of funding arose because Service Delivery Manager John Whittle came to the meeting to explain that the Disaster Fund – traditionally used to repair storm damage, and restored each year, was like Mother Hubbard’s cupboard, and he did not even mention the consequences of the last weekend storm.

At about this point frustration became evident at what apparently had been conflicting advice regarding the liability policy provided during the many “closed-door” workshops that have been held since the start of the term.  The situation was not helped by the confusing and contradictory messages being provided by Chair Strat Peters who was clearly beyond his limits. By the end of the two-hour debate on the $150,000 Thames addition to the Annual Plan he had given up and was unable to provide any clear direction. Board Member French’s frustration was palpable, and experienced BM Hoadley absent. 

The meeting at this point was frankly a shambles, and I think I am as confused as everyone else as to what was finally decided, except the very clear direction to staff that the $150,000 should “not effect rates”. That means more borrowing I guess, though the Chair was endeavoring to get acceptance of the concept that the long time $100,000 used from TUGPRA to subsidize rates through the Parks and Reserves Account should instead be used for the purpose (or at least I think that is what he was on about) If that is what is recorded then I guess we can still look forward to an increase of 8.9% in the local rate component as reported in last week’s post.

 

 

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