Year ends with $900k surplus

Despite a tough year with less income than expected, Palmerston North City Council ended the financial year with a $900,000 operating surplus.

Chief executive Paddy Clifford said the subdued economy had reduced the revenue that the council might have hoped for from activities such as subdivision approvals and building consents.

He said managers and staff should be "applauded for their prudence" in adjusting their spending to fit.

But Deputy Mayor Jim Jefferies said although the result was good overall, he sounded a note of concern that maintenance budgets had been pruned.

Mr Clifford agreed it was difficult to contain spending without creating problems for the future. "It would be a false way to buy time.

"It can be done for a short time only, and is not part of our business plan."

During the year, the council had slashed its debt, by repaying $3.4 million more debt than planned, and by curbing new borrowing.

The withdrawal of $8m for the proposed velodrome after Waikato snatched that project, delays with the central city bus terminal project and late starts on other projects contributed.

Capital spending for the year was $23.7m, less than half the $50.4m expected, creating savings in interest repayments.

"Like homeowners across the country, council has heard the comments from both economists and central government calling on New Zealanders to reduce debt," Mr Clifford said. "I'm very pleased to report that [the] council has done this with respect to existing debt."

The council began the new financial year with a total debt of just under $139m.

However, Cr Susan Baty said the projects still needed to be done, and it was not good practice to have nearly 20 per cent of one year's capital spend carried over into the next year.

Work on half of the deferred capital projects was now planned for this year.

Cr Jefferies agreed that deferring debt was positive in the economic conditions, but things could not be deferred forever.

Some areas where the council was ahead of budget included higher than budgeted rates and rates penalties being collected, and more rubbish bags being sold despite a rise in price that had been expected to reduce demand.

The rubbish and recycling, stormwater, wastewater and water activities all had higher costs than expected.

Cr Pat Kelly said management had done well to keep on budget in a difficult year and continue delivering services despite the revenue shortfalls.

Manawatu Standard