Surplus and lower debt achieved

19 September 2016

Palmerston North City Council achieved an operating budget surplus of more than $2.5 million for the 2015/16 financial year allowing it to spend more on reducing debt.

The Council’s draft Annual Report was presented to a meeting of the Finance and Performance Committee today.

The report showed Council ended the financial year with a controllable surplus of $2,592,000.

This contributed to an additional $6,521,000 being available for reducing debt on top of the budgeted $5,267,000 from rates-funded operations.

Palmerston North City Council’s deputy chief executive Ray Swadel says Council needed to spend less on servicing debt and achieved lower service delivery costs.

Revenue increased particularly in the regulatory services area. The Council also received greater NZTA subsidies for road maintenance and repairs caused by adverse weather events.

“The Council has also reduced costs to ratepayers by obtaining external funding as well as central government funding to help finance capital projects,” says Mr Swadel.

“The new Central Energy Trust Arena partnership assists us to improve our primary sporting and events facilities. Government funding through NZTA and the Urban Cycleways Programme has allowed us to make a start on the He Ara Kotahi shared pathway linking the City to Massey University and the Linton Military Camp. This project includes a new pedestrian/cycle bridge over the Manawatū River.”

“Our spending on capital programmes was below budget but still ahead of the previous year. Projects underway or completed included those dedicated to earthquake strengthening, improving infrastructure, enhancing levels of service and improving future capability.”

“We spent $30.9m out of a budget of $52.3m for the year. This compares to $23m spent in 2014/15. However, Council was not able to carry out or complete all of the projects we had budgeted for in the last financial year. Some were awaiting approvals or required more funding before they could start.”

Projects carried forward include: Junior road safety park; Papaioea social housing project; Wildbase Recovery; seismic strengthening of Council owned buildings; street lighting upgrade; James Line upgrade; Bunnythorpe wastewater connection; Kelvin Grove water bores; and sections of the Manawatū River shared pathway.

“Net debt is well below the level budgeted,” says PNCC chief financial officer Grant Elliott.

“But it’s important to note that when these capital projects are carried out debt levels will rise. These programmes are partly funded by debt and paid off over time – rather than being paid for by the current generation of ratepayers.”

“Council is financially sustainable and we have retained our AA long term credit rating from Standard and Poor’s.”

Mr Swadel says Council is working on improving the delivery of online services particularly for building consents in the coming months.

Copies of the draft Annual Report can be found in the Finance and Performance Committee agenda at pncc.govt.nz/agendas

The adopted draft will now go to the full Council meeting on 26 September, and following ratification the Annual Report will be published next month both online and in print.

ends

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