TOODYAY ratepayers face years of rising costs and economic hardship caused by a 2017 council decision to build a new $14 million recreation centre and pool without the means to pay for it.
The shire’s new 2020-21 budget shows that this financial year’s operating costs will exceed regular income by $2.6 million despite drastic new cost-cutting measures.
The biggest cost burden will be repaying a $4.5 million loan and operating costs for the new recreation centre which the former council approved soon after the 2017 election despite public calls for just a $1 million pool.
The deficit will be offset this year by more than $3.6 million in external grants, subsidies and financial contributions.
However, the shire’s underlying operating surplus ratio is still well below State Government audit standards.
The ratio measures the shire’s ability to pay for its operations out of regular revenue and have money left over to fund new projects.
The council’s long-standing practice of increasing revenue by charging higher rates was postponed this year after an April decision to freeze rates, fees and charges to help relieve local economic hardship caused by the Covid-19 health crisis.
Shire budget papers show that rates revenue raised this financial year will fall about two per cent short of last year’s total.
But the total cost of shire borrowings has more than doubled to $5.9 million – mostly due to additional recreation centre costs.
Loan repayments for all shire borrowings this year will total $600,000, of which more than half will be for the recreation centre.
Ongoing annual shortfalls prompted auditors Moore Stephens to warn the council in June last year of a “significant adverse trend” in shire finances since 2016.
This year’s ratio shows a three-fold worsening of that trend with a budgeted operating surplus ratio of minus 34 per cent.
Last month’s council meeting adopted eight recomendations concerning various parts of the shire’s 2020-21 budget with a mostly unanimous 7-0 vote (Cr Ben Bell absent and one seat vacant).
The only dissenter was Cr Paula Greenway (pictured left at last year’s ground-breaking ceremnony for Toodyay’s new $14 recreation precinct) , who raised her hand against the final motion when Shire President Rosemary Madacsi asked councillors if there were any objections to adopt the budget as a whole, including financial statements, notes, supporting documents and schedules.
The recommendation was moved by Cr Phil Hart, who spoke briefly in favour of it and praised shire staff for putting a “huge amount of work” into preparing this year’s budget for adoption.
His motion was seconded by Cr Therese Chitty, who chose not to speak.
Cr Greenway remained silent when President Madacsi asked if there were any speakers against Cr Hart’s motion.
When her name was called by President Madacsi, Cr Greenway said “I don’t wish to speak”.
The motion was carried 6-1 with Cr Greenway voting against it.
She declined next day to respond to a Herald email when asked to explain publicly why she voted against the budget.
New Shire CEO Suzie Haslehurst was not involved in preparing this year’s budget, which the council adopted last month on only her second day at work.
She said it was a near break-even budget with virtually no surplus – “there’s no fat in it”.
“This will be the case for the next few years,” she said.
“We won’t have any ‘play money’ for big new things.
“Staff have been told to be vigilant about costs and we have to be very cautious about how we approach things.”
Ms Haslehurst said shire service levels had been reviewed and four positions were made redundant for a cost saving of about $600,000.
Budget papers show planned rates revenue of $6.3 million and a nominal surplus of $1.1 million, which includes grants, subsidies and contributions from external sources.
However, operating costs will exceed regular shire income by $2.6 million, largely due to recreation centre costs and large annual loan repayments that are set to continue for the next 20 years.
“We need to be very pro-active about obtaining new grant funding but don’t have sufficient financial reserves to provide matching funds,” she said.
“Our priorities this financial year will be roads, maintenance and upgrades, drainage and footpaths, and paying down loans.”
Ms Haslehurst said she expected construction work on Toodyay’s new recreation centre to be completed by the end of September and the new public swimming pool open in time for the coming summer season.
The shire has advertised for a “suitably qualified operator” to manage part or all of the new recreation precinct including the swimming pool, sports grounds and other facilities.
Tenders close at 2pm on Wednesday July 8.
