Your Council > Budget 2012-2013

CITY OF GREATER GERALDTON 2012-13 BUDGET

At its special meeting held on Monday 9^th July 2012, the City of Greater Geraldton Council adopted its Budget for 2012-13.

Key Points:

• 2012 is a property revaluation year. Property valuations are the responsibility of the State Valuer General’s Office, not the City. The Gross Rental Valuation aggregate for Geraldton has increased by 23.86% since the previous revaluation in 2008.
• The City has adopted a position of not reducing rates-in-the-dollar, consistent with the practice of State Government agencies. For example:
  • State Government sewerage charge on vacant land up 25%, on the new property valuations (following on from a 67% increase last year);
  • State Government sewerage charge on residential land up 0.25%, on the new property valuations (following on from an 8.25% increase last year); and
• State Government FESA Emergency Services Levy rate up 3.3% - on the new property valuations.
• The 2012-13 Budget reflects Council commitment to optimizing its revenue effort through rates and fees/charges, to:
  • Maintain levels of service,
  • Maintain and renew the $400+ million worth of community infrastructure and facilities assets,
  • Develop a sustainable working capital position,
  • Have financial capacity to fund 50/50 matching requirements for Royalties for Regions Grant funds for new projects, and
  • Develop new infrastructure and facilities for the Community.
• Just to maintain service levels, increased revenue raising is required to cover an estimated $4.25M increase in operating costs from inflation, with utility cost increases, forecasts of CPI increasing by 3.5%  (including 0.7% for carbon tax), and WA cost indices for both labour costs and construction costs (including roads and bridges) forecast to increase by 4.5% for 2012-13.
• The budget includes a comprehensive Capital Works program of $47.258 Million in 2012-13.
• The budget reflects an increase of 6.7% in the Rate-in-the-Dollar for Geraldton GRV residential, vacant residential and non-residential properties.
• The rate change equates to an increase of 27.1% of rate revenue to $37.01 million in 2012/13 up from $28.99 million in 2011/12. 
• Total rate revenue makes up 26.7% of the City’s total operating and capital budget of $138.77 million. 
• There was an average 34% reduction in rate-in-the-dollar in 2008. The Geraldton GRV property rates-in-the-dollar increase of 6.7% will bring 2012-13 rate-in-the-dollar to only about 85% of the rate-in-the-dollar set in 2008.
• There is no increase in Mullewa or Pindar Township or other Mullewa UV rates-in-the-dollar. Under the amalgamation agreement, there is a 5 year period for alignment of rates between Geraldton and Mullewa.
• Budget also reflects:
  • Average 15% increase in the Minimum rate payments.
  • (The increase in the Minimum GRV Residential payment from $830 to $955 would only cost a Geraldton household on Minimum rates an additional $2.40 per week).
  • Average 7.6% increase across a range of City Fees and Charges.
• The Budget reaffirms the Council policy to bridge the gap between consumption and depreciation of the City’s $400+ million worth of assets, and its annual funding for essential expenditure on renewal of assets, by 2023. This is consistent with requirements of the new Local Government integrated planning framework for demonstration of financial sustainability. Depreciation expenses are about $14M per year, but asset renewal expenditure is lagging some $7-8 million per year behind. By 2020, the City may need to be rating for about $20M per year just for asset renewal needs.
• In considering revenue requirements, the 2012-13 Budget looks to:
  • Maximum utilisation of funds reserves, to pay for asset renewal and works projects where possible;
  • Utilise borrowing capacity to fund projects – while remaining within the recommended loan servicing limit of 10% of operating revenues; and
  • Raising revenue from rates, fees and charges to generate the additional funds required to match grant funds where necessary, service loans for emergency works such as required for Aquarena, and fund new projects to meet community needs.

Major Capital works projects for 2012-13 include:

• Place Road/Flores Road intersection $4.5M
• Eastern Breakwater development $4.5M
• Karloo/Wandina infrastructure project – including development of Verita Road. City 2012-13 contribution $6M, in joint project with State Housing, as part of the major project receiving Commonwealth Building Better Regional Cities grant of $9M. (Royalties grant application still under consideration)
• Drainage and Storm-water efficiency project $3M
• Aquarena renewal project $2.6M
• Derna Parade Park $1.4M
• Road renewal $2.265M and pavement upgrades $1.596M.
• Art Gallery building upgrade $1.53M
• Recreation Ground change-rooms and toilets $1.5M
• Airport infrastructure and car parking $2.39M (funded from airport revenues, not from Rates)
• Recycling and Green-waste facilities at the Meru waste centre $2.05M, and new waste disposal cell – Meru waste facility $4.75M (funded from waste management revenues, not from Rates)
• Note that waste management facilities at Meru, and developments at the airport, are funded from the respective revenue streams for waste management, and airport operations. They are NOT funded from Rates. Similarly, land development projects are funded from loans that are subsequently repaid from proceeds of land sales or lease income. Projects such as the airport technology park development, or land development projects such as Olive Street, are NOT funded from Rates.

Note that waste management facilities at Meru, and developments at the airport, are funded from the respective revenue streams for waste management, and airport operations. They are NOT funded from Rates. Similarly, land development projects are funded from loans that are subsequently repaid from proceeds of land sales or lease income. Projects such as the airport technology park development, or land development projects such as Olive Street, are NOT funded from Rates.

Property Revaluation

The actual dollar level of rates payable by property owners will increase by a higher percentage for many ratepayers, because 2012 is a Property Revaluation year.

Valuations are the responsibility of the Valuer General’s Office, and the City is provided with valuation data by Landgate.

For Geraldton residential and non-residential properties, amount of rates payable is calculated by multiplying the Gross Rental Valuation (GRV) of the property, by the Rate-in-the-Dollar set by Council.

The previous revaluation was done in 2008, four years ago. Average change in property valuations across the City is an increase in Gross Rental Values of 23.86% in 2012.

With the adopted budget for 2012-13, applying +6.7% increase to the Geraldton GRV rate-in-the-dollar, the following rates increase profile is estimated:

The average increase in Rates payable across the City will be in the order of 27%, slightly above the average increase in Property Valuations of about 24% across the City. The majority of the rates payable increase relates to the general increase in property valuations across the City since the previous valuation in 2008. The large program of capital works, need to match grant funds, and need to continue efforts to close the asset renewal funding gap, mitigated against adoption of a lower increase.

There is significant variation in the changes in property valuations across the City. GRV changes vary from plus 47.7% at Walkaway, to minus 80% at Tardun. At one extreme, on new property valuations, 1106 properties may experience rates payment increases above 50% while 676 properties will experience payment decreases.

Property owners can appeal via Landgate where they believe their upward gross rental valuation is excessive. A simple rule of thumb: divide the GRV by 52 for an average weekly rental value, and test it against levels of rental being charged in the immediate area. If the valuation seems markedly above local rentals, there may be grounds for a valuation appeal. Inquiries should be directed to Landgate, not through the City.

The apparent spike in rates payable reflects the 4-year cycle of property revaluations. The City would prefer more frequent revaluations to reduce rating impacts on property owners, as property values increase, and Council has directed officers to investigate options.

Council to consider direct debit rates payment

In response to community concerns raised, the City of Greater Geraldton Council is considering adopting a policy for direct debit payments for rates for the 2012-13 financial year. An Executive Recommendation to this effect will be debated at the Ordinary Meeting of Council on August 28.

Pending the adoption of the policy, ratepayers are notified a 14 day extension has been granted on the first rates instalment date of August 28, to allow ratepayers to make arrangements for the direct debit option should they chose to take it up.