THE Port Lincoln City Council has flagged plans to borrow $10.2 million over the next two years to pay for a new indoor aquatic facility if it goes ahead with the project.
The Port Lincoln City Council has adopted its Long Term Financial Plan for the next 10 years.
The forecast borrowings are included in a new long term financial plan adopted by the council on Monday night.
The plan looks at the council’s projected revenue and expenses over the next 10 years and how it will achieve its objectives, which are based on its existing strategic directions document and a new infrastructure and asset management plan, also adopted on Monday night.
The plan gives an indication of the rate increases Port Lincoln ratepayers can expect over the next decade starting with 6.4 per cent in the next financial year.
A 6 per cent rise is forecast for 2015/16 followed by 5 per cent rises for the next three years until 2019/20 when the increase is reduced to 4.5 per cent, then to 4 per cent from 2021/22.
In the years to 2016/17, the transition to full cost recovery on the waste/recycling service will be completed and in 2015/16 the introduction of an additional $35 fixed charge amount is included, to cover the likely operating costs of an indoor aquatic facility if it proceeds.
These charges are on top of general rate revenue.
Borrowings of $4.2 million and $6 million are included in 2014/15 and 2015/16, primarily driven by the capital cost of the potential indoor aquatic facility project, based on a 20-year loan and 5 per cent interest rate.
However, the plan forecasts the borrowings being reduced to $1.8 million by 2024 as cash balances allow early repayments.
The council’s chief executive Rob Donaldson said the “manageable” planned borrowings and rate revenue increases “settling at 5 per cent or lower” were sustainable and responsible funding and strategies to meet the community’s needs and aspirations.
Mr Donaldson said it was “pleasantly surprising” how quickly the council could revert back to rate rises of 5 per cent and below.
He said there would be some “hard years” in the meantime as the council progressed toward full cost recovery for waste and recycling services and if it borrowed money for an aquatic facility, but “we very quickly get into what I think it a very satisfactory financial plateau”.
Councillor Mick Bascombe voted against adopting the long term financial plan, which he said would move the council “very swiftly” into an unsustainable position.
“In 2016/17 we’ll be over $10 million in debt with a city with 8000 something rateable properties.”
Mr Bascombe said the proposed rate rises combined with additional charges equated to an 80 per cent increase for ratepayers over the next 10 years, which was not fair, particularly when compared with a rate rise of only 30 per cent from 2000 to 2010.
“This plan is proposing to go into massive debt and there’s no way I’ll have anything to do with it.”
Councillor Neville Starke said the decade Mr Bascombe mentioned “was a period when very little was done in this city” and the future looked brighter.
Councillor Peter Jolley said the council acknowledged the work previous councils had done but there was no point comparing eras.
“We’re in an age of compliance, we simply can’t do the old business we used to without paying enormous amounts of money.
“The rules have changed and I think this is a responsible budget along those lines.”
Councillor Danny Bartlett said he shared some of Mr Bascombe’s concerns about the level of debt, “but ultimately our decisions are budget by budget”.
“I would almost say (the plan) presents a worst case scenario.”
He said whether or not the council ended up borrowing $10 million was yet to be decided.
Councillor Malcolm Catt said he felt like the council had been “flying blind” for a number of years and it was good to know where it was going: “hopefully we get there”.
The long term financial plan will be reviewed every year after the council’s budget is adopted.
This story Administrator ready to work first appeared on Nanjing Night Net.