Attachments - City of Busselton

COUNCIL 24/04/2013
ITEM 9.2 ATTACHMENT
56
Finance Committee 04/04/2013
Based on the timing of fines and penalties related activities, and extrapolating out current
performance to the end of the financial year, it is estimated that fines and penalties revenue will
exceed annual budget estimates by up to $45K by 30 June 2013, predominantly on the back of
parking and dog related infringements.
With regards to scrap metal sales, waste management staff have advised that there is a pending
pick‐up of materials, which should bring in a further $80K in revenue by financial year end. Whilst
this will result in an annual budget shortfall of approximately $40K in this area, scrap metal sales
form part of the overall annual Consolidated Waste Management reconciliation as detailed in the
adopted Waste Management Policy. As such, this shortfall will be offset by additional revenue in
other waste related activities, as part of the reconciliation process in determining the level of funds
to be transferred to, or from, the Waste Management Facility and Plant Reserve at financial year
end.
Cognisant of the above, and for the purposes of projecting a closing surplus/ deficit position, it is
estimated that a favourable variance of approximately $45K will occur within the ‘Other Revenue’
activity as at 30 June 2013, based solely on the anticipated fines and penalties variance.
Interest Earnings
The ‘Interest Earnings’ operating revenue activity not only includes interest on municipal and reserve
funds, but also interest on the Foreshore restricted monies, and finally rates related interest
revenue. In order to provide clarification on the year to date and projected end of financial year
variances, each of these areas is discussed separately, as follows:
• Municipal & Reserve Interest
As at 28 February 2013, there is an adverse variance in municipal and reserve interest earnings of ‐
$177K, with individual variances of ‐$90K and ‐$87K respectively. Based on current projections, it is
anticipated that by financial year end, municipal interest will fall short of annual budget estimates by
up to $200K, with reserve interest trailing annual budget estimates by up to $150K. Whilst the
reserve interest does not directly impact on the City’s surplus/ deficit position (as it is offset via the
‘Transfers to Reserves’ capital expenditure activity), it nonetheless represents a reduction in the
accumulation of reserve monies. Conversely, municipal interest earnings forms part of the City’s
general revenue and consequently, the estimated short fall will directly impact on the closing
surplus/ deficit position. The primary reason for the under‐performance in this area is due to the
unforseen reduction in interest rates since the 2012/13 budget was developed, with the cash rate
falling from 3.75% to 3.0%.
• Busselton and Dunsborough Foreshore Interest
As part of the funding agreements for the Busselton and Dunsborough Foreshore Projects, grants
funds (paid in advance) were required to earn their own interest, and specifically allocated back to
the projects. Similar to reserve interest, these earnings do not form part of the City’s general
revenue, and will not impact on the financial year end closing position. Notwithstanding the above,
associated interest earnings in this area are presently $22K on a year to date basis with
approximately $30K anticipated to be received by financial year end (with no associated budget
allocation).
• Rates Related Interest (Instalment Plan and Late Payment)
As at 28 February 2013, the annual budget allocation ($290K) for rates related interest revenue has
essentially been achieved. Whilst instalment plan interest is raised early in the financial year
(subsequent to the initial instalment date), an additional $16K over annual budget estimates has
been achieved financial year to date. Whilst late payment interest is presently $17K below annual