Rotorua Lakes Council's operating deficit continued in March, and now sits at almost $6.6 million.
Photo: Rotorua District Council
The monthly update, covering the nine months to March 2022, was presented to elected members at a council operations and monitoring committee meeting on Thursday.
Council organisational enablement deputy chief executive Thomas Colle said the organisation was on track to be within two percent of budget but it would be unlikely the council would break even at the end of the financial year.
The council had budgeted for an almost $4.4m operating deficit for the period, and an overall operating deficit for the year of $10.4m. The result for the period was a $5,595,000 deficit.
Colle's presentation stated Covid-19, inflation at 6.9 per cent, cost and demand of materials and staff retention problems were among financial risks to the organisation.
A report for the meeting prepared by council business support lead Michelle Overbeek stated Covid-19 had significantly reduced fees and charges revenue, particularly in parking, lease rental and venue hire.
Operational expenses were over budget for the period by almost $30,000, which the report stated was due to the council's $1m grant toward the QE redevelopment, housing strategy consultancy costs, resource support for the planning and building consent team.
There had also been a higher than expected spend on contractors due to consumer price index adjustments, an effect of inflation.
It also said legal fees and repatriation costs from the landfill court case added to the spend, as well as "increased security initiatives to support community safety".
In the meeting, Colle said staff retention issues were "not unique" to the council.
Colle said parking revenue was also down on budget, and in critical roles staff vacancies - currently saving the organisation $496,000 - were being filled by contractors.
He said the focus of the organisation remained on delivering services.
He said when capital revenues were accounted for, the organisation would have a surplus of about $2m. For the current period, that surplus was about $8.2m.
Colle said he was "fairly confident" and "slightly optimistic [the end of year result] will be slightly better than [within two per cent of the budget]".
Councillor Sandra Kai Fong asked what "within two percent of budget" meant in dollar terms, and Colle said it was about $2m.
Kai Fong asked if there was a strategy to "try and rebalance the budget [and] break even" for the year.
"Otherwise we're looking at then going into the new financial year on the back foot as well."
Colle said short of reducing services and "turning something off" it would be "incredibly difficult" to "pull that back any further".
"We are facing about four to five million dollars of pressure onto our budgets, so I think to end the year within that $1.4m to $2m range is still a very good result in light of all the challenges that we have.
"If the council do wish to pull that back further, we would have to stop doing something."
Rotorua mayor Steve Chadwick said given the "disruptive two years" the council was "at a very good stage of finances for [the] council".
"I wouldn't support cutting anything back. We are at the pointy end of making sure we deliver on the big projects like housing and community safety, so you've done exceptionally well."
Deputy mayor Dave Donaldson said he believed it was a "pretty good result".
The operating deficit for the year to December was $5.9m and in January it softened to $5.1m.
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