SUTHERLAND Shire Council's finances are in good shape, a recent audit report shows.
The council recorded an operating surplus of $41 million for the 2013-14 financial year, up from $5 million for the previous year.
The increase in non-cash income is due to the transfer to the council from the state government of land to the value of $36 million.
The council's net operating result before capital grants and contributions was a deficit of $4.2 million, down from $7.6 million for the previous year.
This result would have improved even more if the timing of the receipt of the federal government's Financial Assistance Grants (provided for general purpose use) had been consistent with recent years where council received partial prepayment of the next year's grants.
The results were presented by the council's auditor, Dennis Banicevic, Director, Local Government Services, PricewaterhouseCoopers at the October 13 council meeting.
Mr Banicevic said the council is in a "sound and stable financial condition."
The council has internal reserves of $41.3 million and externally restricted reserves of $30.5 million which is predominantly section 94 contributions (developer contributions for infrastructure).
The council's working capital (day-to-day operating funds) was $25 million, up from $23 million for the previous year.
The operating performance ratio (the containment of operating expenditure within operating revenues) was minus 3 per cent, where the industry benchmark is zero per cent.
This was partially due to the altered timetable for receipt of the Financial Assistance Grants.
The council’s debt service ratio (how much of general revenue it requires to meet its debt payments) was significantly above the industry benchmark.
The council has five times the amount of operating cash required to service its debt payments. The benchmark figure for councils is nearly a third of this level.
Its cash expenses cover ratio (the liquidity ratio indicating the number of months the council could continue to pay its debts without additional cash flow) was 3.46 months, where the benchmark is three months.
The council has an infrastructure backlog of $55 million, down from $85 million the previous year.
The council is required to spend $18 million a year in the maintenance of its assets. It is actually spending $19 million.
Mayor Kent Johns described the result as an amazing transformation from two years ago when the council was running budget deficits and charging special rate levies to balance its budgets.
‘‘I am proud of the effort the council staff have made in concert with the councillors,’’ he said.
What do you think of the council’s operating results?
