Armidale Regional Council budget review shows net improvement to General Fund
An extensive review of the 2020/21 budget by senior management has resulted in a net improvement to Armidale Regional Council's General Fund result of $2.1 million.
A statement from the council said the second quarter (Q2) budget review presented at the council meeting on Wednesday had a consistent theme of robust and disciplined budget management.
An audit conducted late last year looked at the council's finances since the Armidale and Guyra councils were amalgamated almost five years ago. It found there had been mismanagement of millions of dollars since the merger.
Operating expenditure in the 2017/18 Financial Year exceeded the budget by $11.6 million and put considerable strain on the budget which was already in deficit.
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Major capital projects like the new Armidale Library exceeded budget estimates by $4.2 million and Council proceeded with capital purchases without a budget or funding source such as the purchase of land adjacent to the airport.
Fast forward to this week, and after accounting for carry forward items from the prior financial year, the quarter one revised 2020/21 budget forecasted a consolidated operating deficit of $22k. The Q2 budget review forecasts an improvement to the consolidated operating result of a $2.1m surplus.
The General Fund which accounts for a large portion of revenue collected by rates and user charges has been the focus of the extensive review. An improvement in the operating result from an $805K operating surplus as at the Q1 budget review to a $2.9m operating surplus is forecast, providing a net improvement to the General Fund operating result of $2.1 million.
A contributing factor to the operating surplus is the recognition of grant funding of $693,609 relating to the Local Roads and Community Infrastructure program (Round 2) and an improved forecast for landfill revenues. Budget savings were identified due to event cancellations because of COVID-19, reduced staff resourcing availability to deliver programmed works, review of subscriptions, review of consultancy work, review of unnecessary 'adhoc' expenditure and reviewing operational priorities.
Armidale Regional Council General Manager James Roncon said the Q2 budget review was a step in the right direction.
"The organisation needs continued and sustained discipline and a focus on core services over the next two years to climb out of the financial stress currently being felt by council," Mr Roncon said.
"I would like to thank council staff for their commitment to financial discipline. There is still a long road ahead but services are continually being reviewed to ensure value for money whilst delivering the best outcomes for the community."
Reduced revenue had impacted the budget due to the effects of COVID-19 in the areas of airport revenue, a decrease in lease income, changes in staff, a hold on recruitment and the deferred opening of the new landfill due to improve recycling initiatives.
The 2020/21 capital works program was $42million. The second quarter budget review decreased this to $39m through a revised forecasted works for the remainder of the Financial Year.
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