CITY COUNCIL NCE

Otago Daily Times, Issue 23796, 1 May 1939, Page 6

CITY COUNCIL NCE

CITY RATES REDUCTION RECOMMENDED SURVEY OF FINANCES PROVISION FOR BALANCED BUDGET LOWER INCOME EXPECTED A reduction of Id in the general rate Is recommended in a special report which will be submitted by the Finance Committee at a meeting of the City Council to-morrow The meeting has been called for the consideration of the estimates for the year. The report states:— The general account figures indicate that, despite the difficulty that was experienced last year in preparing a balanced budget, while at the same time avoiding any material disturbance of employment conditions, the council w&s able to carry on the normal volume of work and at the same time live within its income. In that connection acknowledgment is due to the Government for material assistance by way of the provision of subsidised labour Without such assistance substantial reduction of working staffs would have been unavoidable. A Balanced Budget The draft statement for the general account for the new year again shows a balanced budget, based on a reduction of Id in the £ in the general rat*—i.e., from 2s 5d to 2s 4d in the £. The total estimated income is set down at £288,876, or £13,294 less than the approximate revenue for last year. The reduction Is largely accounted for by the drop in the credit balances available from the previous year. The. expenditure side of the statement balances the receipts side. The transfer from the Electric Power and Light Department has been reduced from £18,384 to £16,384; that is, to the figure ruling yearly prior to 1937-38. The transfer from the Gas Department has been advanced ' from £ISOO to £2OOO. The vote for public works is set down at £63,300. Th« actual expenditure last year was £6u,516i The votes for gardens and reserves total £11,370. as compared with £11,589 for last year. Provision is, howjevef, made for subsidiary items for the Reserves Department totalling £1470, as set out in the chairman’s minute. The library vote is £BOOO, being an advance of £422 over last yesir, A list of the special votes appearing in the statement is set out in the chairman’s report, to which may be added the sum of £SOO on account for reconstruction work at the St. Clair baths buildings. It is proposed that the balance of that work, estimated at £4OO, he provided for next year. The vote for work on the Water of Leith and Lindsay’s Creek is equivalent to the actual expenditure by the council last year—viz., £SBOO. It is hoped that a full subsidy may again be available *for these special operations in order that the normal volume of work may be done. Water Supply Expenditure The draft statement for the water account has presented considerable difficulty, owing to the continued heavy demand for capital expenditure. The statement, as drafted, showed a deficit of £ 14,320, This has now been brought down to £2320 by effecting a reduction of £12,000. mainly in items of capital expenditure. The position of the department’s bank account will enable It to carry that deficit without difficulty. Special capital expenditure out of the waterworks loan of £50,000 has yet to be provided for. The proposed allocation for the current year will be submitted to the council at an early date. Loans to be Considered The E.P. and L. statement shows an excess of revenue over ordinary expenditure of £24,221. Provision, however, is made for essential capital expenditure totalling £59,600, which has the effect of creating a substantial deficiency. In view of the present position of the department’s bank account, it is essential that working capital be provided for the department to ease the strain on revenue and permit the banking position to return to normal. It is recommended, therefore (a) that the capital expenditure items shown t in the draft be approved provisionally only on the understanding that separate prior sanction be obtained from the E.P. and L. and Finance Committees before any of the expenditure is incurred, and (b) that steps be taken later in the year to formulate loan proposals to cover the department’s requirements for ordinary capital expenditure over a period of two or three years to meet demands for extensions to reticulation and allied items required to cope with new business. Losses on Trams The statement for the city trams shows an estimated deficiency of £8506, while on the Roslyn system a deficit of £1036 is provided for. The Mornington statement shows a surplus of £lOll, and a surplus of £736 is shown in the bus statement. The figures clearly indicate that measures must be taken at an early date to arrest the drift in the tramway finance. That aspect has already been covered by the council’s appointment of a special committee to report on the whole question of tramway policy. The gas statement calls for no special comment. It is balanced at £103,290. and the detailed figures closely approximate those of last year. As previously stated, provision is made for an advance in the transfer to the municipal account of from £ISOO to £2OOO. The demands by the Hospital Board and the Drainage Board will permit of the same hospital and drainage rates being struck as last year. The committee accordingly will recommend:— That the draft statement of receipts and expenditure of the general account be approved. , , That the statements of the receipts and expenditure of the trading departments be approved. That the sanitary fee for the collection of nightsoil be fixed at the same figure as last year, viz., 38s 6d per pan. The Rates If the above recommendations areapproved. the rating position, allow- . ing for the proposed reduction in the * general rate from 2s 5d to 2s 4d. wiL

THE ESTIMATES REVIEW OF PAST YEAR PROPOSALS FOR CURRENT PERIOD NECESSARY ADJUSTMENTS THE REDUCTIONS DETAILED * An account of the manner in which the municipal finance was administered during the past year and of how the money available is to be spent during the coming year will be given at a special meeting of the City Council tomorrow by Cr Taverner chairman of the Finance Committee The figures to be placed before the meeting will comprise the draft estimates of receipts and expenditure of the General Account for the year 1939-40, together with the draft estimates of the Water Department and the Trading Departments. Past Year Reviewed In a statement which he has prepared setting out the position, Cr Taverner says that it is desirable in the first place to make brief reference to the estimates for the year just closed. It will be recollected, he says, that the statement for the year just closed was prepared under considerable difficulty. The council was called upon to budget for the year on a draft statement showing a deficiency of £44.121, plus a further deficiency of £35,826 in the Special Works Fund Account. The factors which led up to this position were fully set forth to council at the time and need not be repeated. It is sufficient to say that after, as matter of definite policy, eliminating the former diversion from the renewal funds and providing for the heavy increases for wages and other costs which the council was simultaneously called upon to face, it was found possible to balance the statement.

This was only accomplished, however, after adding 4d to the general rate, and limiting the financial provision for relief and allied works to cover a period of six months only. These arrangements envisaged the prospect of a substantial reduction during the year of the men employed on Scheme 13 and similar relief measures, and the closing down of the Scheme 5 works. Actually the council was able to carry the whole of the Scheme 13 labour throughout the year due to further substantial assistance by way of subsidy, which was granted by the Government, and for which the council is greatly indebted. Scheme 5 work was closed down on September 30, 1938. Dealing specifically with the figures for the year just closed, the actual total income was £282,170. The expenditure totalled £271,862 or £3616 less than the estimated outgo. The income figures for last year included a credit balance brought forward from thfe previous year of £14,435. For the incoming year the net balance available to bring into the statement is reduced to £7190. The position for last year must therefore be regarded as eminently satisfactory. The council was able to live within the budget without the necessity of disturbing employment conditions. During the year the ratepayers sanctioned the proposed works loan of. £IOO,OOO and the water loan of £50,000. These works were (inter alia) intended to ease the strain in the general account. and there is now every prospect that it will be possible to put them in hand at an early date. The Incoming Year Coming now to the draft statements for the incoming year ended March 31, 1940, certain references are submitted as to the general account draft, Cr Taverner said. That statement, as originally drawn, based on the requisitions of the various spending branches and on the existing general rate of 2s 5d in the £. showed a deficit of £12,897 without any provision for such items as the Centennial memorial and celebrations. It was nevertheless determined that if at all possible an effort should be made to relieve the ratepayers of something of the additional impost on the general rate levied last year. With that object in view it was detennmeu to proceed with consideration of the draft on the basis of a reduction of Id in the £ on the general rate representing a total sum of £5225. It was further decided to make a provision of £3OOO for Centennial memorial and celebrations as the initial contribution for this year, the balance of cost to be provided for in the succeeding year’s estimates. These adjustments, together with other adjustments on both sides of the draft, had the effect of increasing the estimated deficiency to £20.797. and that is the gap which it was found necessary to bridge to balance the statement. The adjustments which have been made are now set out for the information of council. Revenue The revenue side of the statement shows a total estimated income, based ■ on a 2s 4d rate in lieu of a 2s 5d rate, of £268,876. The reduced rate is calculated to produce £146,300. as compared with the rate income of £14,->,OOO last year. The transfers from trading accounts comprise £2OOO from the Gas Department, being an advance of £.>oo over last year, and £16,384 from the E.P. and L. Dept., representing a reduction of £2OOO and restoring the transfer to the figures which have prevailed yearly un to 1937-1938. Apart, however, from that aspect, it is essential during the incoming two years lhal the demand for financial assistance from the E.P. and L. Department should be reduced to the lowest possible minimum. Tbe revenue side of-the statement is again assisted to the extent of £6OOO. representing insurance premiums transferred. It will be noted that housing loan repayments are set down at £13.966, as compared with £7618 for last year. An item of revenue which appears for the first time is £2OOO representing the estimated income from the motor testing station. Dealing now with the expenditure side of the statement, the following adjustments have been made in order to balance the expenditure within the estimated revenue of £268,876. (1) Public Works Vote.—The departmental requisition was for £69,060. The amount has been reduced to £63,300. The allocation last year was £64,920, while the sum actually expended was £81,516,

(2) Gardens and Reserves Vote.— These two votes have been reduced by a total of £IOOO, making the total vote £11,370, as compared with £11,589 last year. It should be noted, however, that subsidiary items, which did not appear last year, are also provided for, comprising £BOO for conveniences at Chingford. £350 for piping ditch in the Forbury reserve. £SO for painting Oval pavilion, and £270 for five mower units. (3) Library Vote.—The departmental requisition was for £9444. This has been reduced to £BOOO. The vote last year was £7578. (4) Miscellaneous Reductions—(a) Baths, £400: The reduction is to permit of the substantial reconstruction work at St. Clair being spread over two years. (b) House refuse collection. £2OO. and refuse tips. £200: The reductions leave the vote at the same figure as last year. (c) Traffic inspection, £1590: The reduction eliminates proposed provision for additional traffic inspectors. motor cycle and new traffic offices and equipment. A new car to replace the existing vehicle is allowed for. fd) Lindsay's Creek and Water of Leith works, £4200; £IO,OOO was asked for. The reduction leaves the estimate at £SBOO. or the same as last year’s expenditure. If full pay subsidy is available for the work this year, the amount should be sufficient (e) Sundry properties, £2OO. (f) Motor camp, £735. (g) Engineer’s office accommodation. £7OO. (h) Walling at Morgue, £4OO. (i) Purchase Baths reserve lease, £3000: It is recommended that arrangements be made with the lessees to defer purchase for two years. Such an arrangement can be made. (j) Sundry expenditure. £3OO. Special Votes The reference to the foregoing adjustments may be completed by reference to the under-mentioned special votes which appear in the statement viz.:— Vote for Centennial memorial and celebrations (on account) .. £3.000 Vote for ■ maintenance of testing station and equipment £1,973 Vote for completing testing station £2,000 Vote for rest room, Frederick street £250 Vote for new entrance and lifts for Town Hall .. .. £5,000 Vote for completing renovations on second floor, Town Hall 575 Vote for repairs to Art Gallery £ 650 The foregoing adjustments have the effect of reducing the total proposed expenditure to £268,876, balancing with the revenue as shown on the printed statement forwarded herewith. Trading Accounts The estimates of the trading accounts are also submitted in terms of the standing orders. Special reference is called for in respect of the Electric Power and Light Department’s figures. The statement shows an estimated Income of £293,850 and an estimated outgo, including £59,600 for capital expenditure, of £329,229. As the department is at present working on a substantial overdraft, it is obvious that the statement cannot be passed as it stands. Some relief for the revenue account will be obtained by the expenditure of the £26,300 loan authorisation recently obtained, but it is obvious that further loan funds for capital expenditure must be provided to enable the department to rehabilitate its current bank account and at the same time provide for extensions of reticulation and other capital outlay demanded by the ordinary expansion of business. It is recommended, therefore, that the statement as submitted be agreed to provisionally on the understanding that meantime capital expenditure be kept down to the lowest minimum, and that individual items comprising the £59,600 shown in the statement be expended only after the receipt of authorisation by the Electric Power and Light and Finance Committees from time to time.

It is further recommended that steps be taken to formulate loan proposals to cover the department’s requirements for capital expenditure within the city and supply area during the next two or three years.

be as follows; — 1938-39 1939-40 s. d. s. d. General rate .. ..2 5 2 4 )! Hospital rate .. . • ..0 8 0 Water rate .. 0 9 0 9 Water rate (special) ..0 1 0 :l Dnlnafe fate .. 14 1 4 t 8 r It