A SIGNIFICANT increase in Gannawarra Shire Council’s forecast deficit has been described as “no red flag, no cause for concern”.
The forecast $362,000 increase to the underlying deficit was discussed at council’s February meeting last Wednesday night, and mayor, Cr Brian Gibson asked corporate services director Tom O’Reilly for an explanation.
Mr O’Reilly said the increase could not be attributed to one main cause; rather, many small overruns were to blame.
“Council has 200 costed activities and small overruns in each can add up quickly,” he said.
“We instruct our staff to take a conservative view when forecasting, so it’s not uncommon to see potential overruns at the midpoint of the year, but in the second half we see our conservatism pay off.
“I’m confident with the processes we have in place that we will be coming in on budget.”
The revised forecast was contained in council’s finance report for the quarter ending December 31.
The report estimated the budgeted underlying deficit for 2016/17 would increase from $231,000 to $592,000 by the end of the financial year.
Report author, finance manager Sid Hutchinson identified several factors which had contributed to the increase.
The largest was a higher than expected wage increase for staff, with the budget prepared on the basis of a one per cent annual increase, which the actual increase negotiated in the new enterprise bargaining agreement was 1.75 per cent, leading to an additional cost of $75,000.
The end of council’s provision of community aged care packages on behalf of Swan Hill Rural City Council also contributed, with subsequent council redundancies costing $44,000.
Furthermore, a revaluation of footpaths and drainage completed last year resulted in depreciation increasing by $137,000, while only $80,000 had been budgeted – a shortfall of $57,000.
