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Thursday
Sep262019

"Insignificant" Over-expenditure!

Here is the content of a paper that goes to the final Council meeting on Tuesday next week that is designed to "wash-up" the end of year'over expenditure' items. As you will see, this is a convenient way of disguising inefficiency behind a veneer of gobbledegook:

"The decision being considered by the Council is not considered significant when assessed against the criteria within the Council’s Significance and Engagement Policy. Community engagement for this decision is at the discretion of the Council."

 

These are the items being approved:

"In general, over expenditure is usually able to be offset by corresponding increased revenue or over expenditure in one activity can be offset by under expenditure in other activities but within the same group of activities. This is a usual situation and process at year end.

This was not possible in all instances this year. In some instances, capital projects that had planned to be funded from retained earnings were funded by loans so the retained earnings could be used to fund operational over expenditure.

Solid waste

The solid waste activity had an operating deficit of $2.6 million. The deficit was not able to be fully funded from solid waste retained earnings ($0.46 million). Funding was achieved by the deferral of a budgeted ILOS loan repayment of $156,000 with the balance funded from district retained earnings.

3 Waters

The 3-waters activities had a combined operating deficit of $1 million. The deficit was funded by using retained earnings from the water, wastewater and stormwater retained earnings reserves.

Roading

The district roading activity had an operating deficit of $2 million. The roading activity does not have any retained earnings. The deficit was partly funded by funding less depreciation on the subsidised portion of roading capital expenditure ($0.85 million) with the remainder from district retained earnings.

here was an NZTA subsidy revenue shortfall of $2.2 million on the Whitianga Town Centre upgrade project. This shortfall was funded by raising a District loan of $0.27 million for the district portion of the project and a Mercury Bay loan of $1.9 million for the local portion of the project. The rating impact is $1 per district ratepayer and $20 per Mercury Bay ratepayer.

Thames

The Thames Community Spaces activity group had an operating deficit of $0.22 million. The deficit was funded using the remainder of the Thames retained earnings with the balance of

$97,000 being funded from district retained earnings as a loan. The loan will be rated for from the Thames community and paid back to the district retained earnings reserve in the 2020/2021 rating year. The rating impact is $20 per Thames ratepayer.

Capital expenditure

Expenditure was also exceeded on 42 projects by $1.7 million; 19 exceeded by more than

$5,000. The over expenditure was funded using the same funding mechanisms to fund the original project budget if available. For example, if the original project was funded by depreciation reserves, then the over expenditure was also funded by depreciation reserves. In some instances where reserves were not available, the over expenditure was funded by loans. Although these projects exceeded budget, there were 113 projects with a total budget underspend of $10.1 million.

Other

The budgeted top up of the Disaster Reserve from the Coastal and Hazard Management activity of $0.3 million was not possible. The Disaster Reserve year-end balance is $1.2 million instead of $1.5 million."

Nothing to see here - eh! Behind the most innocent sounding papers lies some of the most interesting information.   

 

 

 

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Reader Comments (2)

As you say Bill, nothing to see here.
I would have thought we deserved better than this. Goobledegook. Just as well we have that handy store of funding called depreciation reserves eh. Oh, and loans of course. Oh, and retained earnings. Oh, and the ever handy 'pass the over-expenditure on to the rate-payer' catch all funding mechanism.
All of these handy pools of money just waiting to be used up. And what do 'they' mean when they glibly state that (only) 42 projects exceeded expenditure - only 42! :-(
Well, at least this is a substantial issue for our new councillors, whoever they may be, to get to the bottom of. And to report back to us.
And what, by the way, is the Thames Community Spaces activity group?
Seriously, can you inform us; and who are the individuals that constitute the group?
Get me a whiskey and a chair - I need to sit down; and then fill out the voting paper that has just arrived - didn't someone say they could read a balance sheet or a budget or something; might be useful as it seems that budgeting skills are not in much demand elsewhere at the moment?

September 26, 2019 | Unregistered CommenterRussell

Good question - what is the Thames Community spaces activity group and what has it delivered? My guess, it's consultants fees for the swimming pool project.

September 27, 2019 | Unregistered CommenterImponderable

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