Byron Shire Council is on the brink of going broke, according to long-serving councillor, Ross Tucker.
Speaking after failing to get support for a “razor gang” to be formed to dramatically slash spending, Cr Tucker said he didn’t want to be sitting on a council that “knowingly walks over the cliff”.
“We are in a boat coming up to Niagara Falls,” he said.
“My green comrades think if they talk about it, that’s all they have to do. They think someone else will fix it up.
“We are running away from the problem as our assets are breaking down.
“Much of it has gone past its serviceable life. Patching things up is not effective.”
Cr Tucker’s bid to form a “razor gang” was made during debate on the draft 2011-14 management plan and the 2011-12 budget and fees at the latest council meeting.
He said the council had forecast an accumulated surplus of only $216,200 for the end of the 2011-12 financial year. But that figure didn’t recognise an amount of $139,400 which had been spent and was shown by staff against the accumulated general fund surplus at the December 2010 quarterly budget review, he said.
That report had shown the surplus at $76,800, so the surplus at the end of this financial year should be that amount and not $216,000.
Cr Tucker said the council had set a target of having an accumulated general fund surplus of $1 million. But he said the budget at best was $809,800 short of the target and, at worst, $949,200 short.
Cr Tucker said the council’s adopted 10-year asset management plan indicated the council needed to spend $7 million a year to adequately maintain and repair its assets, with spending of $10 million a year indicated in the 20-year plan. Neither of those figures, he said, were factored into the 2011-12 budget.
A staff report to councillors highlighted the need to slash $757,100 from the 2010-11 works budget, including $245,000 for local roads construction.
A planned $200,000 road resealing program was part of that list, but has since been restored.
The report said there was more than $500,000 in capital works historically provided in the budget that could not be funded. It said the ongoing removal of works from the program on an annual basis was not sustainable.
The report also expressed concern that interest from investments had to be used to sustain its operations.
Cr Tucker said by his calculations, the council’s general fund was potentially $8.5m to $11.5m down on where it should be. He said the council’s position would be dire if it had to react to anything unexpected such as a major road or bridge collapse.
An accountant casting a clinical eye over the council’s finances would say it was close to going broke, he said.
The council could not continue to plunder its reserves.
Cr Tucker said the council was providing too many services which it couldn’t properly fund.
“We have to identify core and non-core responsibilities, look to prioritise and cut from the bottom,” he said.
After rejecting Cr Tucker’s “razor gang” motion, the council voted to put the draft 2011-14 management plan and the 2011-12 on public exhibition for comment.
It also voted to hold two public meetings to explain the plans and why it is seeking a total rate increase of 5.25% for the 2011-12 financial year.
If approved, the increase would raise an extra $398,500 which would be used to cover additional costs for the new sports complex in Ewingsdale Rd and the new Byron Bay Library once it was operational.
It also would be used to get the accumulated surplus back to the “desired target” of $1 million.
The council’s general manager, Graeme Faulkner, said a balanced 2011/12 budget was a high priority for the annual management plan.
"Council has been undergoing cost cutting for the past 18 months and recognises that it needs to review services, infrastructure maintenance and capital works," he said.
Mr Faulkner said the council had established a finance committee at the end of last year to assist with the review.
"The task is how we manage limited revenue streams against growing infrastructure maintenance and other costs," he said.
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