The Hepburn Shire Council Financial and Performance Statements for 2022 were adopted at the regular meeting of Council earlier this week.
Hepburn Shire CEO, Bradley Thomas, said the financial statements had been impacted by unique challenges associated with the pandemic and severe weather events.
“Hepburn Shire, like most local governments, is experiencing a challenging fiscal environment with the continuing impacts of the COVID-19 pandemic, significant storm events during the year, the current rising costs in the economy and operating in an income constrained environment,” Mr Thomas said.
“A major impact on Council’s financial position during the year was the cost of recovery works to support our community following two major storms at Trentham and Creswick.”
A significant percentage of the recovery costs will be reimbursed through government funding; however, Council is forecasting a $1.7 million shortfall in the funding received when the recovery works are completed.
The operating result for 2021/2022 was a deficit of $5.6 million. After removing one-off items, the impact of the storms and non-cash costs of asset write-downs the deficit reduced to $1.52 million.
Council delivered $10.2 million of capital works across roads, bridges footpaths and buildings, throughout the financial year, the most in recent history. The total was $9.4 million in 2020/2021. An estimated $8.5 million of project expenditure will be carried forward into 2022/2023 ($12.1 million in 2020/2021) with the intention of completing these projects in 2022/2023.
Council reported an unrestricted cash position of $961,000, an improvement from $842,000 12 months ago.
On six Key Sustainability Indicators used by the Victorian Auditor General (VAGO) to compare across state councils, Hepburn Shire rated low or medium financial risk in five out of the six financial risk ratios. However, the Underlying Result (adjusted net surplus/ total underlying revenue) indicated high risk at negative 24%. This was a result of unique items which impacted the operating result in the 2021/2022 financial year. Council has budged for an improved position at the end of 2022/2023.
“It is not unusual for councils to report a deficit, however, sometimes it does not reflect the “true” financial performance and cash position of Council and actions are in place to actively monitor and improve this result,” Mr Thomas said.
Mayor, Cr Tim Drylie said Council is in a tight, but stable financial position, and will closely monitor and review its finances and performance over the coming years to ensure it remains in a financially sustainable position.
“Council has adopted that as part of a mid-year review, officers will undertake an organisational service scan by December 2022 to identify opportunities to review operations and projects to ensure Council’s ongoing financial sustainability.”
Financial Statements, Performance Statements and other Shire financial reports are available on the Budget and Finance page on the Council website.