Debt and operating surplus increase

Tina Rogers
Tina Rogers

Timaru District Council debt is forecast to reach $97 million by the middle of the year.

In a report to the council this week, corporate services manager Tina Rogers said at the end of last year debt was at $84m but was predicted to rise.

"Total external loans are forecast in the 2013/2014 annual plan to be up to $97m as at June 30, 2014," Mrs Rogers said.

"Predominant use of that new debt is the oxidation ponds."

The council is predicting an operating surplus of $5.1m this year, following an $11m surplus last year, which Mrs Rogers said was incorporated into future budgets to reduce rate requirements, for debt repayments, or held for specific purposes.

The reason councils borrow for major projects like the ponds is to spread the cost between generations so that all those who benefit pay something towards them.

"In the 2012-22 long-term plan, debt is forecast to reach $98.6m excluding inflation, which equates to $101.5m including inflation. This is forecast to peak in 2017/18. This will be reviewed again in preparation of the 2015-25 long-term plan over the next 12 months.

"The level of debt is well within industry standards and the requirements under the Local Government Funding Agency."

The council's annual report, released in October, showed it recorded a surplus of $11m for the last financial year. It had initially budgeted for a surplus of $2.46m, but a number of factors saw it grow significantly.

The main reasons for the surplus were increased revenue from interest rate swaps, unexpected donations, higher income from building services and trade waste, lower finance costs, an increase in the life of the Redruth landfill and lower costs for depreciation.

This year's predicted $5.1m surplus comes from council building revenue being above budget, along with sewer contributions and revenue from water supply.

The Timaru Herald