Complaints - Please scroll to the bottom of the page
Search
« Speaker Race | Main | Hauraki Rail Trail »
Monday
Sep102012

Council Reserves Administration

This paper on Council Reserves goes to the Community Board tomorrow as a late item. 

This is very interesting, and I reproduce here the final paragraphs which constitutes a timely warning to the Community Board members who for some reason need to be reminded of their obligations in regard to borrowing for the purpose of reducing local rates. 

"Borrowing is only used when all available funding sources are exhausted. However when electing to fund either operating or capital out of retained earnings council must be cognisant of its obligations in terms of stewardship, prudence and fiduciary duty.

For example does the consumption of a community boards local retained earnings to artificially lower the local rate in one year to the exclusion of future years meet councils obligations above?

Would the consumption of local retained earnings to fund capital expenditure projects be prudent use of Councils financial reserves?

The answer to these questions will depend upon careful analysis of the unique circumstances of each request considered".

It seems that there may be second thoughts about the $30m borrowing program for the next three years that was so blithely adopted for the Ten Year Plan, and in particular, the rather too easy manner in which Community Boards enter into arrangements that require the use of Retained Earnings reserves.
The whole manner in which our Council convinced itself that reducing rates while entering into capital works commitments that required further borrowing raised flags for me as to the to the prudence requirement, and now there may be some real misgivings within the Castle as to the actions that they took at the time. I wonder whether some queries may have been raised during the post TYP auditing process.
There certainly appears to be a disconnect between the TYP and the warnings outlined above. The fact that this has been submitted as a "late paper" gives rise to the suspicions that there may be some concerns being expressed. 
My interest is certainly heightened with the advent of this paper - it will need to be carefully watched over the next period. I will report progress as it occurs.

PrintView Printer Friendly Version

EmailEmail Article to Friend

Reader Comments

There are no comments for this journal entry. To create a new comment, use the form below.

PostPost a New Comment

Enter your information below to add a new comment.

My response is on my own website »
Author Email (optional):
Author URL (optional):
Post:
 
Some HTML allowed: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <code> <em> <i> <strike> <strong>