Council Adopts a Deficit Budget for 2024/25 - And They're Not Alone

Hepburn Shire Council adopted its 2024/2025 at a special meeting last week.

Shire revenue is expected to be $40.7 million while operating expenses are projected to be $42.8 million leaving a projected deficit of $2.1 million.

Rates will rise by the maximum amount allowed under the state government rate cap of 2.75% announced by the Minister for Local Government. By comparison, CPI for the year ended March 2024 was 3.6%. Rates income will increase by $0.72 million due to the increased rates cap and growth.

The draft budget was open for community feedback for a period of three weeks from May 28. Twenty-two submissions were made to Council but none of those resulted in any changes to the draft budget.

Council received three non-recurrent operational grants after the draft budget was developed. These included $100,000 for activation of the Creswick Trails project, $185,000 for Open Access Libraries and $128,000 for a Community Recovery Officer. These grants have been included in the budget but do not affect the bottom line since they all involve expenditures against the grant income.

The budget includes $100,000 to support the affordable housing strategy, an amendment which was included when the draft budget was released for public comment.

The budget includes planned savings in operational costs of $1.5 million. Much of this will be accomplished by leaving some positions vacant or delaying appointments. No job losses or redundancies are planned at this stage. While Council will work to minimise the impact, reductions in operational costs have potential to impact service delivery and capacity to invest in infrastructure.

The budget includes a capital works program of $8.4 million encompassing roads, infrastructure, improvements to assets and completion or progression of community facilities.

The budget proposes $5.53 million of new borrowings to support the delivery of capital projects. The Daylesford Town Hall will have $1.03 million allocated to finalise roof and electrical replacement to ensure the ongoing protection of a key heritage asset. Another $4.5 million will be allocated to the general capital program for 2024/2025.

Mayor, Cr Brian Hood, said that this is the fourth and final year Budget under the current Council Plan and it funds important services such as roads, parks, waste and recycling and more.

“Like many other Victorian councils, Hepburn Shire Council must make difficult financial decisions to ensure its long-term economic viability,” said Mayor, Cr Brian Hood. “The budget has a strong focus on the completion of current works, projects and infrastructure, services and programs.

“While there is little room for any new projects, community consultation on the budget attracted some important community feedback that was considered by officers and Councillors, and will be used to inform future financial planning,” he said.

Hepburn Shire Council is not alone in its struggle to maintain financial viability. Both the state and federal governments have recognised the precarious financial situation of local government councils. The Victorian State Government, via the Legislative Council Economy and Infrastructure Committee, is currently holding an Inquiry into Local Government Funding and Service Delivery in Victoria. The Federal Government is also currently holding an Inquiry into Local Government Sustainability.

Local Government Finance Professionals (FinPro) is the peak body servicing local government finance professionals in Victoria. FinPro has members representing all Victorian councils and advocates on behalf of members. FinPro president and Hepburn Shire CEO, Bradley Thomas, has made submissions to both inquiries on behalf of the association.

The recent FinPro report shows that of the 79 local government councils in Victoria, nearly half had an underlying budget deficit in the 2022/23 financial year, a substantial increase from from the 2018/19 financial year. The analysis also showed that small shires, such as Hepburn, are falling behind at a greater rate than larger regional and metropolitan shires.

In the longer term, Council needs to find an additional $4 million in revenue and savings to develop a financially responsible long-term financial plan. Council will start this month to prepare their next 10-year financial plan.

“We will continue to listen to the community’s needs and strive to deliver high quality services that align with our community’s priorities and expectations,” said Cr Hood. “We want to hear from the community as we plan for future financial sustainability, delivering the services they need and managing our assets responsibly.”

More information on engagement activities for the Financial Vision will be found at https://participate.hepburn.vic.gov.au/financial-vision when available.

Councillor Column – The Draft Budget Requires Difficult Decisions

Hepburn Shire Not Financially Sustainable

This article is based on a media release from Hepburn Shire Council.