Clarence Valley Council’s projected $268,607 deficit for the 2015/16 financial year has blown out to $812,235.
The 2015-16 monthly financial report for August, tabled at last week’s council meeting, recommended “budget variations of $543,628 to correct the 2015/16 original budget”.
The report to council states: “The External and Internal Financial Reserve Funds Result reported in the July monthly financial report indicated a reduction in reserves of $10,758,446.
“This budget review is recommending further reserve budget variations of $164,828, which decreases the projected reduction in the External and Internal Reserve Funds to $10,593,618.
“The unaudited External and Internal Financial Reserve Funds opening balance as at 1 July 2015 inclusive of cash and non cash balances is $89,084,192.
“The new projected reserves balance as at 30 June 2016 will be $78,490,574.”
The major omission in the budget was $457,500 “for wages and on-costs for Financial Accounting staff”.
Other additions to the deficit included an omission for two 4WD vehicles ($36,528), the removal from the budget of grant funds no longer expected ($45,700), an increase in commuter vehicle expenses ($45,700) and the “annual transfer to [the] Building Contingency reserve for emergency works and renovations” ($100,000).
However, there were positive budgetary corrections, too: an error in the income for development control – Planning Services ($100,000), a correction to the information technology budget ($47,000) and the $4,600 saved when councillors forwent the annual increase of their fees and allowances.
At the previous week’s Corporate, Governance & Works Committee meeting, the mayor, Richie Williamson, and Cr Arthur Lysaught supported the officer’s recommendation to approve the budgetary adjustments; however, councillors Jim Simmons and Karen Toms successfully amended the recommendation to include requesting the general manager to “bring a report to the October Council Meeting detailing options to reduce the general Fund deficit for 2015/16 to a balanced budget or thereabouts”.
Councillor Simmons was also successful in including the council “note” that he “would not have voted in favour of adopting or approving the 2015/16 General Fund budget had it been a higher deficit when presented initially, as a result of this amendment”.
Councillors Williamson and Lysaught voted against including these two points; however, the motion was carried with the support of fifth committee member, Cr Jason Kingsley.
At last week’s council meeting, Cr Toms attempted to amend the committee’s recommendation: she asked for the $457,500 to be transferred from “the Strategic Building Reserve in the 2015/16 budget … to [the] General Fund to pay the staff wages”.
During debate about this idea it was established that Cr Toms had erroneously identified the Strategic Building Reserve as having $1million dollars in it, which she said could be used “to get rid of the bulk of the problem and let the GM look at the other things”.
As a result of the code of meeting practice, Cr Toms was unable to amend her amendment and voted against it with the other eight councillors.
When debate returned to the committee meeting’s recommendation, Cr Baker attempted an amendment to “note” the variations instead of approving them.
The mayor ruled his amendment out of order, after which councillor Baker failed to gain any support for a motion of dissent.
Corporate director Ashley Lindsay told the councillors that the council “can’t actually pay staff until the budget is approved”.
Councillor Toms asked: “How have we been paying [staff] since the [2015/16] budget was approved?”
Mr Lindsay said: “Effectively we are paying it out of accumulated working capital; there are budgets in those accounts [to which] these staff are charging their time to the ledgers, but the budget’s not enough to cover all of their wages, so we will be overdrawn, effectively.”
Only Cr Baker opposed the motion.
Councillor Toms subsequently contacted the Independent to correct her error and showed that the $1million she was referring to was recorded in the council’s financial statements in the Works & Civil Directorate of the General Fund – at Item 3 for depot rationalisation, which was funded by “$500,000 from Sewer Fund and $500,000 from Water Fund”.
“We don’t want to start chopping stuff from the budget when we’ve got funds elsewhere,” she told the Independent; “let’s use some of that money to pay some of the wages we’ve forgotten.
“Let’s correct [the budgetary error] with this $1million that’s sitting there for a project that we’ve yet to vote on to give it the go-ahead.”