Central Coast Council’s budget blowout: Councillors ask to borrow developer contributions
Central Coast Council has come up with a controversial financial plan to survive the immediate future, following its $89M debt bombshell. Meanwhile councillors have revealed their utter shock over the financial crisis.
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Central Coast Council will ask permission to use developer contribution funds to help get through the budget blowout crisis - a move labelled “blatantly irresponsible” by at least one councillor.
During a heated council meeting on Monday night, councillors voted to ask NSW Local Government Minister Shelley Hancock for permission to borrow restricted funds, such as developer contributions, to help with immediate cash flow issues.
This is depite the council recently coming under fire of the NSW Auditor-General and having to pay back $13.2 million in developer funds it used to cover adminstrative costs.
If this fails, the council voted to ask to borrow $100 million from emergency funding sources such as TCorp to help “maintain liquidity” or until the council's 100 day recovery plan is endorsed.
Last week, the council announced its budget deficit had blown out from $41 million to $89 million, however councillors alluded to figures much higher at last night’s meeting.
The Office of Local Government is currently investigating the issue and will conduct a forensic audit.
Cr Troy Marquart was floored when the idea of borrowing developer contributions was raised.
“We are asking to break the law,” he said. “This is not a solution we should be considering. “This is blatantly irresponsible … but we will just continue to whack our fingers in the cookie jar.”
Deputy Mayor Jane Smith said if the council received State Government permission, it would not be considered breaking the law.
Council’s acting chief executive officer Jamie Loader, who is filling in for CEO Gary Murphy while he is on leave, said accessing the restricted funds was the preferable option to help with day-to-day cash flow.
He said the current balance in council’s accounts was $328 million, with council still able to pay staff and suppliers.
“The daily focus on cash flow is crucial and reducing our expenditure,” he said.
Cr Kyle MacGregor said borrowing the money would help pay staff that mow the lawns and run the childcare centres.
“The ordinary people that work on the tools shouldn’t have to bear the brunt of this,” he said.
“Let’s make the right decision to make sure the people that didn’t make this happen aren’t the hardest hit.”
Cr Greg Best said without knowing the exact financial position of council, there was no math around the decisions being made.
Council also voted to focus on finalising a 100-Day Action Plan and also establish a finance committee.
The 100-day plan includes identifying savings, reducing non-essential services, removal of financial delegations, review of temporary/casual contractors, restricting staff overtime and identifying a more aggressive debt repayment program.
“I'm scared for our community”
One of the major themes of the council meeting was the sheer shock and disappointment expressed by the councillors who first heard the news of the financial disaster last Tuesday.
“When this became evident to me, I was absolutely gutted,” Cr Chris Holstein said.
“I can’t put into words my disappointment at the position we find ourselves in. people have to take responsibility.”
Cr Richard Mehrtens said: “we have been let down and that has made sure we have let down the community in turn”.
Cr MacGregor said councillors were completely in the dark until Tuesday, despite passing budget after budget in recent times on staff recommendations.
“This is a catastrophic failure and needs to be addressed,” he said.
Cr Jillian Hogan said she was “scared for the future of the Central Coast community”, while Cr Jilly Pilon sad she can’t see how the council would not be put into voluntary administration.
Cr Pilon said she also found it distressing that Mr Murphy and the acting chief financial officer were both absent from the meeting.