Attachments - City of Busselton

COUNCIL 24/04/2013
ITEM 9.2 ATTACHMENT
57
Finance Committee 04/04/2013
budget estimates, this revenue is raised monthly and based on current activity, it is projected that
the annual budget estimate may be exceeded by over $30K as at 30 June 2013. Consequently, a
favourable end of financial year variance in rates related interest of up to $50K is anticipated by
financial year end.
In summary of the above, it is anticipated that the ‘Interest Earnings’ activity will reflect a collective
adverse variance of some ‐$270K by 30 June 2013. However, for the purposes of estimating a closing
surplus/ deficit position, a net shortfall of some $150K is projected, comprising ‐$200K in municipal
interest and +$50K in rates related interest.
Non‐operating Grants, Subsidies and Contributions
As at 28 February 2013, there is an adverse variance of approximately $2.4M is respect of this
activity. This is due in part to timing differences, as grant funds have either been received in advance
of budget estimates or works have been delayed, meaning that grants are not able to be acquitted
within projected timelines. Due to the large number of items comprised within this activity, the
following provides a summary of those items where major variances are evident on a year to date
basis.
• Favourable variances
There are currently favourable variances in relation to, amongst others, the Busselton Community
Resource Centre, the Vasse‐ Busselton path network upgrade, and the Glenmeer Ramble to College
Avenue pedestrian bridge. As previously mentioned, these variances can be attributed to works
being completed ahead of schedule, or grants paid in advance of budget timing estimates.
• Adverse variances
There are currently adverse variances in relation to, amongst others, the Busselton Foreshore
project (still awaiting CLGF approval of grant funds), the Geographe Leisure Centre Geothermal
Project and numerous Boat‐ramp projects. These variances are primarily due to delays associated
with the respective projects, which has in turn delayed acquittals.
The above variances will not have any direct impact on the City’s closing surplus/ deficit position, so
long as grants for works completed are raised on or before 30 June 2013. Conversely, where grants
are received in advance and the works are not completed by the end of the financial year, any
unspent component of grant funding received will be transferred to restricted assets.
In addition to the above, there may be projects that will not be commenced in 2012/13, and as such,
neither the grant funds, not the associated expenditure will be incurred. The Busselton Regional
Airport exemplifies this. The adopted budget includes approximately $2.4M in capital expenditure
for the Airport Terminal (Stage 2), New Apron and Jet Fuel installation and associated infrastructure.
This expenditure was to be fully funded from grant and external funding. However, as the external
funding has not been able to be secured at this time, the expenditure and associated grant funding
will not be incurred in 2012/13. As such, this will represent a shortfall in revenue to the order of
$2.4M, which will be offset by the associated capital under‐expenditure.
Profit on Asset Disposals
This activity recognises any book profit gained on the disposal of an asset (primarily fleet based),
whereby the disposal proceeds are greater than the written down value of the asset. Budget
variances in this item will not impact on the overall budget performance, due to an offsetting noncash
adjustment. The current variance is primarily attributable to the present underspend in the
associated ‘Plant and Equipment’ capital expenditure budget. However, as it is anticipated that the