City budget finds balance amid uncertainty
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Published on 22 June 2020
A challenging but responsible 2020-21 budget that balances community needs with financial sustainability has been adopted this evening by the City of Hobart.
A $135.5 million operating budget and $34.1 million capital program focus on essential services, maintenance of existing assets, and programs that contribute to the wellbeing of the community.
This has been achieved with no increase to general rates and most fees and charges, but will result in a forecast operational deficit of $11.8 million.
“This has been a very difficult budget,” Lord Mayor Anna Reynolds said. “Like our community, the City has been impacted financially by the COVID-19 pandemic.
“We’ve had to make some very hard decisions around reducing spending. At the same time, we recognise the need to support our community through this recovery period, and we have made funding available for assistance packages and community grants.
“This is a responsible budget for these uncertain times. The organisation will work with a tighter budget in order to provide for our community.”
The budget includes an allocation of $4.6 million in assistance for ratepayers experiencing financial hardship.
“We have made a commitment to be there for residents and ratepayers who are doing it tough,” Cr Reynolds said. “We have frozen rates and adopted a zero per cent increase on fees and charges to minimise the impact on our community.”
The exception is an addition of $10 per property to fund the new FOGO collection, which was introduced in November and had the service charge waived for the first eight months.
Finance and Governance Committee Chair Alderman Marti Zucco said an estimated $17.7 million drop in revenue would impact the City’s ability to deliver some programs and activities.
“As a result, we’ve cut our spending by $5.3 million compared to 2019-20,” he said.
New borrowings of $15 million will support the City’s capital works program, of which more than two-thirds will be spent on asset renewal as the City focuses its attention on existing infrastructure.
“This year is about maintaining what we already have, rather than introducing new capital projects,” Ald Zucco said. “Though our capital works, there will be a strong focus on maintaining jobs and on purchasing from local suppliers and services to stimulate our local economy.”
Included is $10 million for roads renewal and $3.6 million for stormwater infrastructure. About $600,000 will be spent on upgrading fire trails for both community safety and recreational uses, and $1.8 million will fund infrastructure in parks and reserves.
The multi-stage Salamanca precinct pedestrian improvement project will continue, with $2.3 million allocated to complete stages 2 and 3.
The Council has resolved to review the budget and forward estimates by the end of this calendar year.
“Given the exceptional circumstances under which this budget has been developed, it’s appropriate that we have another look at our position in six months and see if we can make any amendments at that time,” Lord Mayor Reynolds said.
Cr Reynolds said there was no easy solution to a complex and difficult financial environment.
“We are going into the next financial year knowing that it’s only the first step towards recovery,” she said. “This year’s budget addresses our short-term operational needs while we develop a three-to-five-year recovery plan.
“We’ll need to factor in any longer-term impacts from this current downturn, while preparing for any future financial challenges that may come our way.
“The good news is that modelling to date suggests that, with disciplined spending and good forward planning, we will be in a much more positive position this time next year and beyond.”
The recovery plan will include detailed financial modelling and a review of borrowing and repayment strategies.
2020-21 Budget Snapshot
Operating Budget: $135.5m Rate increase: 0% FOGO/green waste collection: $10 for properties that have the new FOGO service Other fees and charges: 0% increase Capital works program: $34.1m COVID-19 ratepayer support: $4.6m City Cleansing: $3.4m Parks/reserves/sporting facilities maintenance & management: $7m Bushland infrastructure maintenance and improvements: $3.5m Community and creative programs: $2.3m Community events support: $2.1m Community, creative and business grants: $1.2m