MODEL BUDGET/PROPERTY TAX MEDIA RELEASE
[Note: bold items require insert of relevant Council numbers/names; italics require consideration
of appropriate form of wording to reflect your Council’s decisions. Note also that “property tax”
terminology is being partially introduced to reflect the Act but we accept that common
understanding in the community will remain “council rates”.]
Good Practice Council’s 2006/07 budget adopted tonight will see (insert reference to
growth in services/standards, projects, major infrastructure renewal projected for
2006/07 – preferably described as benefits rather than as Council activity – ie “works to
reduce flooding risk in suburb x” rather than “replacement of stormwater drains in y
street”). Operating expenditure is forecast at $aa and a capital budget (total capital
expenditure) of $dd has been approved.
The average Good Practice residential ratepayer will see a $bb rise in Council rates
this year bringing the average annual residential rates to $cc to help fund the budget.
Industrial/commercial property taxes will rise by an annual average $ee and primary
production rates by an annual average $ff. Mayor Leader said there would be variations
above and below the averages but this would be lower than in recent years because
property value movements had had lower variations (and Council has applied a cap – or
note any other measures with this effect) (NB: consider attaching a table showing dollar
quarterly rates increases for different value and differential classes of properties)
Mayor Leader said property values had continued to grow more strongly than the
Council believed acceptable for rates and so it had lowered tax rates accordingly.
Mayor Leader said the outcome compared well with a 4.2% (private sector)-5.6% (public
sector) movement in Average Weekly Earnings (AWE) to February, 2006, which was
one of the most relevant indicators of community capacity. In addition Council has
budgeted for a $gg increase in concessions, rebates and remissions, including State
Government-funded benefits. (Insert sentence on other measures to assist specific
ratepayers e.g.: A cap of hh% will soften the impact of rates where property values have
risen more than average)
The Budget meeting followed consultation (outline here the Council’s most visible
consultation mechanisms regarding its strategic plan, budget and rates). “The
community told us clearly they wanted the services and infrastructure we are providing
and were willing accept that taxes had to rise to pay for them,” Mayor Leader said.
It should be noted that the average residential, business and primary industries figures
above exclude development growth (new ratepayers, buildings and extensions)
estimated to be ii% of property values in 2005/06.
The Budget results in a forecast operating (deficit/surplus) of $jj. The operating
(deficit/surplus) means that the Council’s operating revenue in 2005-06 (will not be
sufficient/will be more than sufficient) to meet all of the operating costs of providing
Council services, which include interest and depreciation. (Add the following where an
operating deficit is forecast) The operating deficit is a significant indicator of the extent
to which Council is still struggling to maintain $kk of infrastructure including roads,
drains, parks and buildings. (Mayor Leader said this issue remained a concern but that
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the Council’s 10 year forward financial plan was aimed at achieving a sustainable
position by 201X). (Add the following where an operating surplus is forecast) The
operating surplus will be used to help fund upgrading of Council’s infrastructure assets.
After taking account of capital transactions, the Council’s stock of net financial liabilities
is expected to (increase/decrease) by $ll in 2006-07 to approximately $mm at 30 June
2007.–This is equivalent to a $nn.nnn mortgage on a $300,000 house (calculate
proportion to illustrate net financial liabilities against infrastructure assets)
The Budget also will see all existing services and service standards maintained (except?
- and give reasons for any cuts) and incorporates anticipated efficiency gains and cost
savings across Council programs (estimated at $oo or % if possible).
Good Practice Council Mayor Leader said the Council had worked hard to identify
efficiencies and to ensure the budget met community expectations. “Our budget will
remain with an operating deficit in 2006/07 but unless unfair Commonwealth and State
government grants rise or we were to raise rates more than we felt appropriate, it will
take us a number of years to achieve an operating surplus,” he/she said.
“Council is conscious that the LGA’s Independent Inquiry into the Financial Sustainability
of Local Government flagged that ongoing operating deficits are unsustainable.” “We are
looking at every opportunity to improve our financial performance without compromising
services or increasing rates beyond what we believe the community will accept.”
Primary cost drivers in the budget include projected salary increases of pp% as a result
of enterprise bargaining agreements, (list here any other significant cost impact on
budgeted operating expenses).
The Council is also anticipating that Commonwealth and State government operating
grants will fall/rise in real terms by qq%. Mayor Leader said he noted that the LGA’s
Independent Inquiry had estimated SA Councils were being short-changed by about $50
million a year in grants from other governments and Council would continue to work with
the LGA on strategies to improve external funding.
Mayor Leader said that Council had keenly debated the need for (outline needed
projects which could not be incorporated in the budget) but it had decided these could
not be afforded in 2006/07. “Without worsening our position, we could only consider
such projects if we stopped doing something else, or if State or Commonwealth grants
were raised to more equitable levels.”
Attached: please find attached a data sheet on the Council’s Budget based on the LGA’s draft
consistent budget presentation standard.
Full budget papers can be found on www.goodpracticecouncil.sa.gov.au/goto/budget.
Further comment: Contact Mayor Leader on mobile
work
home
For further financial information Contact CEO Humble on mobile
work
home;
Communications Officer Credible on mobile
work
home; or Finance Manager Plain-English
on mobile
work
home.
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DEFINITIONS:
Operating expenditure - annual spending (cost of services, including interest and depreciation);
Operating deficit - amount by which annual spending exceeds annual income (excludes capital
revenues/expenditure);
Operating surplus - amount by which annual income exceeds annual spending (excludes capital
revenues/expenditure);
Capital revenues - value of grants tied to new capital spending (mainly on infrastructure);
Capital transactions – capital spending on infrastructure and other assets, less proceeds from
sale of assets, less capital revenues and less depreciation;
Net financial liabilities – the key measure of a Council’s financial position, being total liabilities
less financial assets
Mindful that “averages” often hide significant variations, the following table may present a clearer
picture of rates movements. The table would require variation to reflect various options applied
under the Act and could be repeated for different suburbs/wards to further illustrate variations
across the Council area (Select values to best illustrate variation in your Council.)
Property type/valuation
Minimum Rate (if applicable)
Residential $200,000
Residential $400,000
Residential $600,000
Residential $900,000
Industrial Commercial $800,000
Industrial Commercial $1,200,000
Industrial Commercial $1,600,000
Primary Production $600,000
Primary Production $800,000
Primary Production $1,200,000
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Annual rates increase ($)
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