1. Special Rate Variation - 2012 Information for Residents 22 November 2012

2. This Presentation Background –Rates –SRV – what is it Council’s Finances –What do they look like –What has been done What are the Options What is the Process What are your thoughts and questions

3. Rates Rates are determined in accordance with the provisions of the Local Government Act 1993. –Provides the mechanisms to calculate rates and limits the income councils can derive from rates. Council has 4 categories – Farmland, Residential, Business and Mining – with subcategories under those Affected by land values and revals done every 3 years

4. Rate Pegging Rates can only be increased each year by the rate peg amount – IPART determined – around 3% (inflation) Can apply to IPART for a greater increase SRV only applies to the GENERAL rate, not water, sewer, garbage –Separate funds with income only to be used for service provision and asset maintenance associated with each fund.

5. Where does Council get its Funds from?

6. Council Funding A $24m budget in total About $2.7m in rates –Rates on Council properties – not collectable About $2.5m in Australian Govt grants – untied Other funds for specific purposes –Roads grants, weeds, emergency services etc

7. Core Council Services Set up as Roads, Rates and Rubbish Water and Sewer added All other services are ‘extras’ that Council can choose to provide at request of community or other levels of govt. –Some are now legislated eg weeds, emergency services Includes youth services, tourism, sport and rec, parks and gardens, health services, airports, emergency services and more.

8. Council’s Rate Income $2.7m in 2012/13 –$0.486m farmland (19%) –$1.067m mining (37%) –$0.27m business (10%) –$0.88m residential (34%) 2012/13 major revaluations for mines –Farmland and residential rates fell –Mines rates received the brunt of the 3.6% increase –Mine rates increased significantly due to reval

9. Who are some of the other 24 Councils in our Group? Blayney Bland Walgett Wellington Liverpool Plains Lachlan Temora Narromine Oberon

10. How we Compare- Group 10 Councils Residential Rates 2009/10 –Cobar $396 –Group Av $474 –NSW Median $660 –20% below group av Farmland Rates –Cobar $1193 –Group Av $1984 –NSW Median $1834 –66% below group av

11. How we Compare- Group 10 Councils Business Rates 2009/10 –Cobar $676 –Group Av $987 –NSW Median $1841 –46% below group av Mining Rates –Can’t compare within group –Rate in the dollar low and fell last year to stay within the peg

12. Why is a SRV Being Proposed? The auditor says we need to increase income and reduce expenses The state government – DLG – is encouraging Council to apply NSW Treasury currently looking at the financial sustainability of Council It’s in our Financial Sustainability Action Plan that we report to DLG monthly It’s in the LTFP Unlikely to increase grant income significantly

13. What has been happening? Council has been unable to balance the budget for the last two years Operational costs continue to increase, including electricity and chemical costs Cost shifting from other levels of government eg health services Rate pegging and limited opportunities to raise income

14. Council’s Finances Council has been able to maintain an operating surplus each year bar the last 2. Getting finances back under control To remain sustainable, need to increase income and reduce expenses SRV is part of the plan

15. Asset Management Council has a vast array of assets to maintain, repair and replace. Council does not have adequate resources to do so This is the case for most NSW councils Council should factor into the LTFP a figure for replacement of the assets over their lifetime and an annual replacement and renewal amount

16. Lifecycle Costs - AMP p.a. required $m Budget $mRatio Water$1.75$1.60.91 Transport$11.07$4.280.39 Sewer$0.43$0.230.54 Recreation$1.15$0.940.82 Stormwater$0.1$0.02.2 Buildings$1$0.280.29 Short Fall $8.14m annually

17. What does the auditor say? Last year there was no unrestricted cash (can’t meet non budgeted expenditure) –we now have over $3m in cash. Previous year borrowed from water and sewer (2 of the last 3 years) –Now have separate fully funded reserves established Council must ensure expenditure is kept within budget –Deficit reduced by nearly $1m this year from last year Council is dependent on non rates income –Rates income is low compared to other councils

18. What does the auditor say? Council is not investing enough in asset repairs and renewal. Of the $1.5m operating loss, Council had a $1.4m fall in value of works undertaken on state highways –Increase in plant hire rates saw the budget improve in 4 th qtr last year Borrowing costs higher Depreciation increased due to reval of roads etc

19. What has Council done to reduce costs? All budgets have been tightened There was a 12 month freeze on staff replacement Few community donations this year Centrelink Office closed Seeking adequate reimbursement for the RMS front office Seeking increased funding for Regional Roads

20. What has Council done to increase income? Sold 11 Becker St and other land on market Develop VPAs, S94. S94A and s64 plans Increased plant hire rates Critically assessed all fees and charges Do not believe there are any other income raising opportunities

21. Other Council Actions EOI for LBV Taken out a $1m loan to improve cash position Improving financial reporting processes and systems Critically analysing project costings, such as RMCC works Written off bad debts, chased income owing Reduced outstanding staff leave entitlements to reduce the liability to Council Created an Employee Leave Entitlement fund

22. Options for a SRV Only one part of the puzzle One off increase Annual increase over a period of time up to 7 years Different criteria – not yet released –Need for rate rise –Community involvement –Reasonable impact on ratepayers –Sustainable borrowing strategy –Implementation of planning documentation

23. What is Being Proposed? One off 25% increase in 2013/14 –Rates to rise by inflation in future years –Includes 3% inflation (rate peg) –Can sustain current services –Funds to be used to cover operational costs of the swimming pool and some road maintenance Annual 13% increase for 7 years –Includes 3% annual inflation –Funds used to cover the operational cost of the swimming pool, road and asset maintenance –Assets will be improved under this model

24. How Will You Be Affected? Cobar Residential – 25% One Off –2013 Rate – $455 ($114 per quarter) –2014 Rate – $571 ($143 per quarter) –2020 Rate - $682 ($171 per quarter) Cobar Residential - Annual 13% increase for 7 years –2013 Rate – $455 ($114/qtr) –2014 Rate – $511 ($128/qtr) –2020 Rate - $1063 ($266/qtr) With CPI, rates will be $560 by 2020 ($140/qtr) –23% rise from this year

25. What is the Process? Council has resolved to get community feedback on the two options –25% one off –13% annually for 7 yrs Number of community forums to be held to inform and gather feedback December Council meeting Council will consider which option to take to IPART Application made early 2013 IPART reports about May/June 2013 Increase comes in from July 2013.

26. Fact Sheets 3 Fact Sheets to take away –Rates Get your rates notice out and see what your general rate is now Do you know what your general rate was 10 yrs ago? –Special Rate Variation Understand the two options and the impact on yourself –Are you happy to pay an additional $30 a quarter OR –Would you rather pay $266 a quarter to improve the services and assets in the Shire? –Understand the services Council provides and what they cost

27. Survey Please complete the survey and put in the box tonight –Provides data and information for Councillors to consider –Your preferences are included –Your say is important