June 5th, 2024Draft budget dire
Hepburn Shire Council is in such dire financial straits that Mayor Cr Brian Hood and two other councillors voted to defer the release of its draft budget until September.
At a special meeting of council on May 28, Cr Lesley Hewitt moved a motion which acknowledged the challenging financial environment that is confronting councils across Victoria and requested the CEO and Mayor write to the Local Government Minister to seek an extension of time to the September 2024 council meeting to adopt the budget, to allow the council to undertake further work including extensive community consultation.
The motion also requested that the CEO work with councillors to undertake additional councillor workshops, engage with the community during July and prepare an updated Financial Plan (10 years) for consideration at the September 2024 council meeting that addresses the long-term financial sustainability of the council.
It was voted for by Cr Hewitt, Cr Don Henderson and Cr Hood. Those against were Cr Jen Bray, Cr Juliet Simpson, Cr Tessa Halliday and Cr Tim Drylie. After alternative motions, the draft budget was moved to be released for public discussion.
Cr Hood, speaking on why the draft budget release should be delayed said it was “absolutely unacceptable and unsustainable to budget for deficits”.
“The draft budget does not meet the requirements of the overarching governance principles set out which relate to ensuring the ongoing financial viability of council.
“(It) does not prudently manage financial risk (and) in its current form it also does not meet the requirement to provide stability and predictability for the community. The limited mention of rates does just the opposite – it creates uncertainty.”
Cr Hood said in its current form the draft budget posed unacceptable risks and was outside the council’s stipulated risk appetite and policy in that it “recklessly projects a scenario of having no unrestricted cash available to buffer against unforeseen emergencies (such as the storm and flood events experienced in recent years).”
Cr Hood said the draft budget disclosed unfunded cash shortfalls in the order of $4m in each of years 2, 3 and 4 – a gap equivalent to 20 per cent of the council’s rates base or 12.5 per cent of its cash operating expenses.
“In reality the budget quantifies massive problems to the community with no solutions. It is simply unfair and unrealistic to present a budget with massive deficits and cash shortfalls for a review by the community in less than three weeks. Nothing constructive could be achieved in that period.
“While there has been limited discussion/debate today on the budget’s contents there has been absolutely no discussion on what the next three weeks’ consultation looks like.
“When informing the community of further deficits, no cash buffer, no major capex projects, possible service cuts and rate hikes what do we expect them to do with that info in three weeks and what do we expect their reaction to be?”
In a media briefing the day before the draft budget was released, Cr Hood, speaking on behalf of the council as mayor, said financial issues had arisen from the cumulative effect of sub-CPI rate capping ($5.8m over the past three years), high inflation in construction and other costs, cost-shifting from other levels of government, mostly state, and waste charge changes effective from 25/26.
Cr Hood also said Hepburn Shire had a small population, a low rate base and an overly ambitious service offering from the council.
The council is looking at asking the state government for a rates variation from the current government cap, cuts of operating costs of $1.5 million, new borrowings of $5.5 million for capital expenditure and the Daylesford Town Hall, the completion of only ongoing and renewal works, and slashing full-time staff from 190 to 174.
Public consultation is open until June 13, with its adoption set for June 25. Link: www.participate.hepburn.vic.gov.au/draft-budget
Words: Donna Kelly
