Model Budget/Property Tax Media Release
2011/12
14 January 2011
DME 67675
Model Budget/Property Tax Media Release 2011/12
Please note that while this is long for a media release, one of our
objectives in the model - apart from being open and transparent with key
indicator data we believe should be provided - is to remind media that as
with State and Federal budgets there are three key elements:
1) financial performance (particularly surplus/deficit);
2) primary service areas, changes, projects, innovations; and
3) changes in tax rates/fees etc.
While it could be broken into three releases segmenting the above
elements, either way it is the equivalent of a Budget Speech and a host
of media releases which are provided by State/Federal governments.
Media has increasingly recognised this rather than falling to the old
habit of reporting only on "rates increases" rather than budgets when it
comes to Local Government.
[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 2011/12 budget adopted tonight will see (insert reference to
maintenance/growth in services/standards, projects, major infrastructure renewal –
preferably described as benefits rather than as Council activity – i.e. “works to reduce
flooding risk in suburb x” rather than “replacement of stormwater drains in y street”).
An operating surplus / deficit of $aa is forecast and capital spending on infrastructure
and other assets of $dd has been approved.
Mayor Leader said his/her Council was conscious both of the impact of the current
financial climate on the community and of the importance of Council works projects to
contractors and for local jobs. 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 average $ee, primary production
rates by an 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 that as in other years tax rates had been set by the Council to
fund the level of services required by the community.
Mayor Leader said the outcome compared well with rises in Average Weekly
Earnings (AWE) of around 4% - 6% in the 12 months to November 2010. In addition
Council has budgeted for a $gg increase in concessions, rebates and remissions,
including those funded by State Government. (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)
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Model Budget/Property Tax Media Release 2011/12
The Budget meeting followed consultation including (insert most visible consultation
mechanisms) on the Council’s draft annual business plan for 2011/12. “The
community told us clearly they wanted the services and infrastructure we are
providing and were willing to 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 the impact of development growth (new ratepayers, buildings
and extensions).
The budgeted operating (deficit/surplus) of $aa means that the Council’s operating
revenue in 2011/12 (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 $hh of infrastructure including roads, drains, parks and
buildings. (Mayor Leader said this issue remained a concern but that the Council’s
10 year long-term 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/repayment of Council debt.
The Council’s stock of net financial liabilities is expected to (increase/decrease) by $ii
in 2011/12 to approximately $jj at 30 June 2012.–This is equivalent to a $kk,kkk
mortgage on a $500,000 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 $ll 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 2011/12 but unless 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 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 also is anticipating that Commonwealth and State government operating
grants will fall/rise in real terms by qq%. The Council is particularly grateful for the
additional $mm expected to be received from the Commonwealth under its Regional
and Local Community Infrastructure Program.
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 2011/12. “Without worsening our position, we could only
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Model Budget/Property Tax Media Release 2011/12
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 PlainEnglish on mobile
work
home.
DEFINITIONS:
Operating deficit - amount by which the annual cost of providing services exceeds rates and
other operating revenue;
Operating surplus - amount by which rates and other operating revenue exceeds the annual
cost of providing services;
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 $300,000
Residential $500,000
Residential $700,000
Residential $1,000,000
Industrial Commercial $800,000
Industrial Commercial $1,200,000
Industrial Commercial $1,600,000
Primary Production $600,000
Primary Production $800,000
Primary Production $1,200,000
Annual rates increase ($)
$rr.00
$rr.00
$rr.00
$rr.00
$rr.00
$rr.00
$rr.00
$rr.00
$rr.00
$rr.00
$rr.00
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DME 67675
Model Budget/Property Tax Media Release 2011/12