City council's six month financial result

The City Council has released its six month financial result for the 2007/2008 financial year.


As at December 31, 2007, the Council produced an operating deficit of $4.7 million, which is $2.4 million lower than its planned deficit of $2.3 million.


When the income from vested assets and development contributions are included in this operating result, the Council recorded a $1.4 million net deficit.


Financial Accountant, Russell Watts, says this result was significantly impacted by revenue being lower than budget by $2.8 million and expenditure higher than budget by $0.5 million.


“The revenue was affected by lower than anticipated Land Transport New Zealand (LTNZ) subsidies on roading capital works ($1.1 million), a poorer performance by the Council’s Investment Fund ($1 million) and income from vested assets and development contributions being $1 million behind budget,” Russell says.


“The expenditure was affected by higher interest costs ($0.75 million) and the additional cost of operating water and waste services ($0.9 million). However the full impact of these two was partially offset by savings achieved elsewhere in Council.”


The Council’s Finance and Performance Committee also heard this afternoon that capital expenditure is $7.7 million behind the budget of $27.7 million. Russell Watts explains that the key differences relate to some delay in progressing major projects and the deferment of others.


“Managers are now forecasting to complete $42.1 million of capital works by the end of the financial year which is $12 million less than budget,” Russell comments. “Some capital projects for this financial year have been revised which will help to contain costs.”


Forecasts for the year ending June 30, 2008, are indicating that the Council’s interest expenditure and the cost of providing water and waste services will continue to adversely impact on the budgeted deficit. With six months to go it is forecast that the Council’s operations will cost $3 million more than was budgeted.


In the meantime Councillors and Council staff are implementing strategies to reduce the impact of these unfavourable variances on the Council’s end of year performance.