Local authorities' operating deficits continue

Local authorities recorded a seasonally adjusted operating deficit of $70 million in the September 2010 quarter, Statistics New Zealand said today.

"The deficit this quarter is $50 million larger than the June quarter deficit of $20 million, largely driven by reduced revenue from investment income," national accounts manager Rachael Milicich said.

Investment income decreased $86 million in the September 2010 quarter from an unusually high level in the June 2010 quarter. Investment income arises from interest and dividends and it is not unusual for dividend payments to be irregular in both size and frequency.

Seasonally adjusted operating income for local authorities decreased $36 million to $1.7 billion in the September 2010 quarter. The main contributions to the decrease came from investment income (down $86 million), and regulatory income and petrol tax (down $5 million). Partly offsetting these falls were rises in rates (up $35 million), current grants, subsidies, and donations income (up $14 million), and sales and other operating income (up $6 million).

Seasonally adjusted operating expenditure increased $14 million in the September 2010 quarter to $1.8 billion. Contributions to the increase came from purchases and other operating expenditure (up $9 million), employee costs (up $6 million), and depreciation and amortisation (up $1 million). Partly offsetting these rises was a fall in interest expenditure (down $2 million).

Seasonally adjusted operating deficits have now occurred for 11 successive quarters. 

Highlights

Seasonally adjusted local authority statistics for the September 2010 quarter compared with the June 2010 quarter show that:

• Local authorities recorded an operating deficit of $70 million.
• Operating income decreased 2.0 percent to $1.7 billion, driven by falls in investment income, and regulatory income.
• Operating expenditure increased 0.8 percent to $1.8 billion, driven by rises in purchases of goods and services, and employee costs.

The actual (not seasonally adjusted) deficit is $71 million.