Council's debt in manageable state

Councillor Charles Sturt

Council staff have moved to quell public "misinformation" about its financial situation after revealing a $5.9 million budget improvement in the council's draft Annual Report.

Rotorua Lakes Council chief financial officer Thomas Colle told councillors at an operations and monitoring committee meeting yesterday that the council finished the 2014/15 financial year in good shape, $5.9 million better than budget.

During his report Mr Colle said $8.3 million in operating costs had been removed from the budget during the year.

"Cashflow is $5.9 million better than budget, and we repaid debt instead of borrowing."

Before Mr Colle presented his report, council chief executive Geoff Williams said he was concerned the Rotorua public were being fed misinformation about the council's financial situation.

Mr Colle moved to assure councillors and the Rotorua public that so-called "vanity projects" were not driving up debt as some people thought.

"$167.5 million is our total debt, there is nothing hidden, it includes the airport and all other projects. Our debt is sustainable and the council is in control of its financial management and is acting lawfully."

He said two major projects - the Rotoiti/Rotoma sewerage project and the Whakarewarewa Land Treatment project, worth about $18 million each, were also factored into council budgets and would seriously contribute to debt levels in the coming years.

But, with prudent management, debt levels would fall to $145 million by 2025, he said. "This is the first year since the financial review and we have not borrowed to fund operational costs," he said.

Meeting chairman, councillor Charles Sturt, said it was an excellent result.

"There is considerable apprehension in the community, particularly in the business community and development community about some of the statements being made out there that are totally incorrect.

"Finishing the 2014/15 year $5.9 million better than budget is an outstanding position.

"This very good result is a reflection of a methodical and well-managed approach.

"We had planned to borrow $4.2 million, and we finished up $1.7 million better off in cash.

"This has meant we've been able to pay down $1.2 million in debt - the first such debt payment in many years - and still finish with a cash reserve that's increased by $500,000," he said.