Council is rolling in cash

The City of Melbourne is making so much money, it can’t spend it fast enough.

For the past three years it has failed to spend its capital works budget.  In the last financial year, it underspent its works budget by whopping $28 million.

In speaking about the council’s financial performance in 2014-15, finance chair Cr Stephen Mayne told the Future Melbourne Committee meeting on August 11: “Possibly the most note worthy item is the capital budget where we finished with a $28 million underspend.  We said initially we’d spend $120 million but have come in only at $92 million.”

The council finished the year with an underlying surplus of $16.5 million – $10.1 million more than it expected.  It has promptly transferred half of its surplus to its Queen Victoria Market Renewal Fund.

During the last financial year, the council exceeded its budget in:
Parking fees – $2.8 million;
Fines – $1.6 million;
Maintenance – $1.8 million; and
Sales of assets – $1.2 million.

But it came in under budget by $3.8 on materials and services, due to paying more to contractors and its Citywide subsidiary came in $1.5 million under budget.

In the financial year, the council pulled in $421 million and spent $374 million.
Cr Mayne told the Future Melbourne Committee that the council’s cash position had increased $7 million during the year to “a very healthy $110 million”.

“Overall the council does remain in good health,” he said.

He said parking revenue was $4.5 million ahead of budget with $93 million being collected.

On the question of capital under-spending, Cr Mayne later commented:  “The record capital works under-spend of $28 million in 2014-15 further strengthens the case for a detailed 10-year capital works program with public granularity around the timing and spending on individual projects.”

“The first version of this will hopefully be released with the draft 2016-17 budget in May next year.”

“It is better to under-spend then overspend and this has helped council to minimise the size of its loan drawdown from ANZ after settlement of the Munro purchase on July 1.”

“The vast majority of the identified projects will still be delivered so it’s just a timing issue but in an ideal world budget outcomes finish as close as possible to council-endorsed budgets,” Cr Mayne said.

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