The Council finished the year with a controllable surplus of $4,762,000 however $520,000 of that has been carried forward into the 2014/15 financial year.
Chief executive officer Paddy Clifford says the variance has occurred because of a reduced call for some expenditure, particularly maintenance related with no adverse weather events, the delay of some planned expenditure (for both external and internal reasons), a reduced need for professional service costs, and some grants not being incurred.
We had expected some of our major projects to have either been fully or at least partially incurred thereby reducing the favourable variance reported on at the third quarter of the 2013/14 financial year. "However," says Mr Clifford, "this only occurred to a limited extent.'
An additional $9,113,000 was available for debt reduction on top of the budgeted $3,632,000.
"This is very pleasing. However, it's important to note that debt levels will increase as those projects, particularly capital, which have been carried forward are incurred in the new financial year."
Chief financial officer Grant Elliott says the 2013/14 financial year has been good for Council.
"Council's debt level is significantly lower and reduced debt means reduced interest costs. This, alongside the reduced call for some budgeted expenditure, particularly maintenance related, lower grants and professional service mean Council is on a sounder financial footing as we enter a new financial year."
"While many of the reasons for the surplus are external I do want to highlight the fact that Council management and officers are focused on expenditure reduction and I am proud of their efforts which are having an impact while still delivering the services required."
Financial accountant Keith Allan told Councillors at today's Finance and Performance Committee meeting that Capital Expenditure programmes valued at $23.9m have been incurred against the overall capital programme budget for the year of $38.6m.
The carry forward includes: Papaioea social housing project; Supporting infrastructure for the Lido Pool hydro slide project; Wildbase Recovery; seismic strengthening of Council owned buildings; Turitea Valley/ Pacific Drive new water supply; Longburn wastewater connection; Ashhurst wastewater treatment (possible pond lining); waste minimisation community facility to assist diverting waste from landfill; major upgrade of Main Street Bus Terminal; and, the Manawatū River Shared Pathway (Ashhurst to Riverside Drive).
Keith Allan says the amount available from operations for debt reduction was reduced by debt incurred to fund new capital expenditure to give a net $3.4m reduction compared with a budgeted increase of $16.1m.
It is important to note that when these projects are carried out debt levels will increase as they are intergenerational programmes that are partly funded by debt and paid off over time - rather than being paid for by the current generation of ratepayers.