Wednesday, November 30, 2011

Town Council council tax rate stays the same! Why?

The Conservatives have announced the Town Council tax rate will stay the same at £84.23 for a Band D property. This will be the third year running the Council Tax remains the same. So how do they do that when the new Conservative administration is spending money on HDC owned CCTV and South Street toilets?

The answer is the Liberal Democrats left the Town Councils finances in fine fettle. The Conservatives were welcomed with a £186,575 surplus on the 2010/11 budget when they took power. This leaves total reserves standing at £905,547 at the start of this financial year.

The Conservatives have had to face some cost increases:

The Town Council propaganda rag - Priorities - is costing an extra £10,534.
The money from HDC for the Customer Service Centre has gone - £7,084.
Museum running costs up by £4,000. Though they get this back in rent - up by £4,000.
Jubilee Hall is a new cost at £6,500. Though this is returned by rent increase to £6,500.
CCTV is a new cost at £22,750.
Grants has increased by £5,015.
Town Promotion salary £28,011.
QE2 celebration £20,000 - (a one off)

A total increase of £82,820.

With other savings and cuts this means the net expenditure for the Town Council section of the budget 2012/13 is £756,379. This is up from the 2011/12 budget (£705,373) by £53,988.

The reason why this increase isn't reflected in the Town is because a couple of costs have really gone down.

Eatons Community Centre down by £16,703.
Priory Centre costs are down saving £47,731

A total of £64,434 saved in the budget. This means the net expenditure before the capital cost is £820,957 against the 2011/12 budget of £831,406. This is a reduction of £10,449.

The problem is with the capital costs. These have been changed so the previous way of accounting for the in Earmarked Reserves (£398,134) which has been closed and the money transferred to the new Capital Projects account.

Capital Projects in 2011/12 were allocated £56,478 (This figure was £58,478 for last year. A £2,000 difference) For 2012/13 the allocation has gone up to £573,461. This is an increase of £514,983 (not £474,893 quoted in the draft budget). What has to be taken into account is the transferred money -£398,134. This makes an increase total of £116,849.

This is a big increase (though in reviews of previous Town Council budgets I reckoned the amount should be £100,000). £95,024 of this money is coming from General Reserves. Not usually good.

The precept for this year is £889,884. The precept for next year is £901,261. An extra £11,377. The money from extra housing is £11,371.

In the new capital budget there is money flying around everywhere.

Extra money is going into:

Allotment land  - £38000
New cemetery land - £20000
Eatons Capital project - £10000
Loves Farm - £30000
Play areas  - £10000
Signs - £2000
Toilets - £55000 (£40,000 capital + 1 year running costs £15,000)
Priory Centre - £40000
A total of £205,000

This was helped by:

Projects stopped - £29673

This leaves a net figure of an extra £175,327.

Of which £95,024 is coming from General reserves. The use of General reserves is a real no-no if this is used to reduce spending. The forecast is a budget surplus for 2011/12 of £94,540. If this is attained or exceeded then the funding isn't bad for next year.

The trouble is the underlying increase in capital spending. For instance if £40,000 for the toilets, £40,000 for the Priory Centre and £30,000 for Love's Farms are all one-offs and this money is taken from General Reserves the underlying increase is within reason.

A couple of problems:

1. The £15,000 a year to run the South Street Toilets isn't included in projections.
2. The Hall Hire income on Eatons Community Centre doesn't sit right.
The projected income for 2011/12 is £18,212. Next year there is roughly a £17k. Unless there is a good reason for this increase then adding £17k is wrong. By 2013/14 this rises by another £13k. This is a total increase of £30k over the projected figure for 2011/12.

The Town council could be out by £45,000 of extra expenditure in future years.

The Council Tax base has been announced. This now stands at 10,820 for next year. This is an increase of 120 over the 10,700 used in the calculations for the Council Tax. 120 x £84.23 = £10,170 in extra income not allowed for in the budget. If the Town Council just agreed the budget this would have made the Council Tax fall by 93 pence. (£901,261 / 10820 = £83.30). As the Town Council decided the amount of tax should be £84.23, the Town Council will see this money.

Overall this is a good first budget by the Conservatives. A few niggles on my part. Putting money aside for future projects, whilst they have the money, is a good thing for the Council. What helped most was the £186,575 surplus from the previous year when the Liberal Democrats were in power. For the future the Conservatives need to keep the budget balanced and tax & spend accordingly. Relying on reserves to keep the Town Council from raising Council Tax is a fool's errand.

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