Bayside Council has forecasted a funding shortfall of more than $158 million over the next 10 years for its asset maintenance and renewal obligations.
This is an increase of around $34 million on the $124 million shortfall previously reported to Council.
The figures were revealed in the council's Draft Long-Term Financial Plan 2023-2032 (LTFP) submitted to an extraordinary meeting of council last week for endorsement prior to going on public exhibition.
While there are a number of options for Council to consider in addressing the shortfall, it is unlikely it will be able to be addressed without contemplating some form of revenue raising response, the report on the Draft Long-Term Financial Plan stated.
The $158 million shortfall in the LTFP forecasts is comprised of an asset maintenance funding shortfall of around $50 million over the next 10 years ($5 million annually) and an asset renewal shortfall $108 million ($10.8 million annually).
"This funding shortfall is significant and a serious challenge for Council to address to ensure ongoing long term financial sustainability is achieved and for Council to continue to provide valued services required by the community," the council's report stated.
The total funding shortfall for asset maintenance over the LTFP has increased by $10 million compared to what was previously reported and the funding shortfall for asset renewals have increased by $24 million resulting in a combined increase of $34m over the life of the LTFP.
"One of the main factors contributing to the increase is that Council's depreciation expense has continued to increase faster over the past few years," the report stated.
Depreciation expense identifies the value of the funding shortfall for the investment Council is required to make to renew its infrastructure assets.
Options available for Council to address the financial challenge include:
. increasing revenue
. reducing expenditure (reviewing type and scale of services)
. reviewing/rationalising current asset holdings.
With regard to increasing revenues, the main options available to Council include:
. Reviewing user fees and charges to maximise cost recovery and of subsidies provided to different user groups throughout the LGA
. Implement financially viable paid parking schemes across the LGA
. Review property rentals and commercialise more of the property portfolio
. Explore revenue opportunities related to advertising throughout the LGA.
. Review of rating structures and revenue.
For reducing expenditure, the main options available for Council are:
. Reduce overall employee costs, which will impact the type and quality of services Council is able to provide
. Rationalise and reduce the type, quality and frequency of services provided across the LGA
. Review asset management levels and determine a lower standard for maintaining assets
. Review property lease agreements and transfer asset maintenance responsibilities onto tenants
. Further reduce discretionary expenditure in the use of overtime, agency staff, contractors, and consultants.
In reviewing asset holdings, Council could consider:
. Demolition of existing assets which are no longer fit for purpose.
. Review existing assets and identify surplus assets which could be sold and reinvested.
Over the next few months, further workshops will be held with Councillors to determine which options are to be incorporated into the next update of the Long-Term Financial Plan and future budgets.
