Financial management and forecasting for local government is a complex process involving many variables and layers of legislation.
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Essentially council, or Local Government, is a service legislated by state government, provided to the community and paid for through multiple income sources, with rates for our shire bringing in only around a third of the funding needed.
Council is required to produce a Long Term Financial Plan that makes projections for income and expenses for a 10 year period. It goes on public exhibition through April and May and is adopted in June each year.
Over the last five years, that forecast for Kempsey Shire Council - revised regularly - shows that the cost of materials, wages, and maintaining or replacing the $1.5 billion in assets has increased far more than the income council can generate.
Improvements to the way we assess the condition of the road network, and the accuracy of calculating replacement costs, mean that millions of dollars in borrowed funds will be needed in the next 10 years to keep the roads up to a safe standard.
Borrowing money for asset maintenance, or to help spread the cost of major infrastructure projects like the new landfill cell at the Waste Management Centre or airport upgrades, costs significantly more now following the rises in interest rates.
It's these costs that mean the current projection is that council's deficit or gap in income to expenses will grow to $103 million over the next 10 years. That's not a viable position and an investigation is underway as to whether a Special Rate Variation is required.
Council is working with residents and community groups to clarify this complicated forecasting process. Useful information provided includes that council has no ongoing costs or financial liability to the operation of the Kempsey Cinema, that any major projects or grant applications must complete a detailed financial and business case review before they can progress, and that staffing levels are consistent with other similar sized councils.
The information on council's Your Say Macleay site https://yoursay.macleay.nsw.gov.au/our-financial-future is being updated regularly as the engagement continues throughout October ahead of a recommendation being presented at the November Council meeting.
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