2011-2012 Annual Report - Full Version - PDF - Palmerston North ...

Year in ReviewAgainst the backdrop of global and national economic uncertainty Palmerston North has beenbetter off than a lot of the country, however times remain tough for our residents and businessesand we remain conscious of this.Overview Year in ReviewThe Council remains committed to its directionto have Palmerston North recognised as a vibrant,caring, innovative and sustainable city. This wasreviewed as part of the long term plan with no majorchange in direction and is part of our planning.Financial PerformanceFinancially it’s been a difficult year. Some plannedrevenue sources did not eventuate meaningthat to stay within budget tight controls onexpenditure were required. In setting rates Councilhas to balance the need to provide the servicesrequested, many with a statutory requirement toprovide, against the ability of the community topay. We also needed to weigh up who benefitsfrom the services we fund to maintain the Council’sassets and infrastructure while also repaying debtto ensure the City is financially sustainable.Section 2 of this document includes detailedinformation on the activities and services theCouncil provided, but the financial highlightsinclude the following items.• The Council finished the year with a surplus of$921,000 over its rates-funded operating costbudget.• An additional $3,444,000 was available fordebt reduction on top of the budgeted$2,205,000 – meaning the Council reduced atotal of $5,649,000 worth of existing debt.• All asset renewals to maintain existingcapacity have also been funded fromoperating cashflow with $2,127,000 less spentthan budgeted. Part of this is yet to be spentin the new year and will increase debt then.• While Council officers worked hard to deliverservices within budget resulting in a surplusfrom controllable operating activities,inclusion of non-controllable items meantthe Council’s overall financial result was a$10,749,000 deficit compared to a budgetsurplus of $1,315,000. This unfavourable resultwas largely out of the Council’s control due tothe effect of the continuing recession.A large part relates to budgeted non-cashcapital revenues for vested assets fromdevelopers with only a minimal amountreceived, capital revenues on other capitalprogrammes which didn’t go ahead and noncashaccounting adjustments.• Expenditure on new capital has been $9.6million funded by capital revenues of $2.1million and a debt requirement of $7.5 million.This was lower than planned for a numberof reasons:• some amounts will be expendednext year.• some programmes are no longer required.• Some programmes have been deferred toallow review of the on-going need forthe programme.• Gross debt has increased marginally over 2011with the increase primarily due to the amountto fund new capital of $7.5 million. This hasbeen offset by debt reduction from currentyear rates-funding of $5.649 million and fromapplication of long term investment fundwithdrawals of $1.7 million.A key focus for the Council continues to beensuring financial sustainability and enablingfuture debt repayment. To achieve this requiresCouncil to continually seek excellence to achievemore with less, to change to meet requirementsof the economy and community, to question howwe operate and what we are doing, and ensuringwe continue to deliver services within operationalbudgets. These financial results reflect that we areachieving this.4Palmerston North City Council Annual Report 2011/12