Snowy Valleys Council has shelved plans to pursue a special rate increase next year.
The council had flagged applying to hike rates across the council area by an additional 10 per cent in 2020, above the allowable rises permitted each year by the Independent Pricing and Regulatory Tribunal (IPART).
This year, IPART allowed an increase of 2.7 per cent.
Former Tumut Shire residents have been subjected to an additional 10 per cent impost over the past 14 years, under a scheme that’s due to finish next year.
It’s currently netting the council about $650,000 a year, which is spent on projects such as kerb and guttering, road maintenance and stormwater improvements.
It means that come June 30, 2020, those former Tumut Shire residents face a potential reduction in rates.
Former Tumbarumba council area residents have not been subject to the additional rates hike.
The backflip follows a public consultation process over the past two months conducted as part of the council’s formation of planning documents, including its 2019-20 operational budget.
There were 42 submissions sent in to the council objecting to the prospect of the 10 per cent rates hike. Most came from the Tumbarumba region.
Cr Julia Ham said the council’s decision not to apply for the rate increase showed it was listening to the community, while the mayor, James Hayes, said rate increases, including harmonisation of rates between the former Tumut and Tumbarumba areas, should be left to the incoming council, due to be elected in September, 2020, to decide.
Any special rate variation requires a lengthy submission process, including community consultation.
The council said an efficiency program, initiated as part of the merger, “deferred the need for a special rate variation at this time”.
A long-term financial plan shows the council is spending about $1.4 million a year more than it brings in, a position it says is unsustainable.
The council aims to address the shortfall, in part, by:
• Reducing employee costs by about 6 per cent of its $14m spend on staff. The council will make a one-off realignment of its staffing resources, bringing a $200,000 saving, before reducing costs by a further $600,000 over the next three years by not replacing positions as they become vacant.
• Reducing spending on materials and contracts by $250,000, and bringing in an additional $100,000 through private works.
• Hitting residents with additional user charges, bringing in an additional $150,000 each year.
• Reducing depreciation expenses by disposing of underutilized assets ($100,000).
The prospect of the existing 10 per cent rate increase ending next year will be welcome news to Tumut region residents, who in 2003 were promised the move would not lead to them paying more money to the council. The council had assured the community it would decrease water and sewerage charges to offset the cost of the rates hike.
However, several years later the council moved to increase water and sewerage charges.
Two months ago the council was arguing the rates hike was crucial to it being able to continue to deliver existing services to the community.
The council is hoping to realize savings as part of a program initiated following the merger, and will wait for that strategy to run its course before considering applying for a rate increase.
“It’s prudent at this stage to give the council improvement program a chance to realize the savings put in there,” the council’s assets and infrastructure director Matthew Christensen said.
“Being a recently merged entity, we need to improve the service delivery we have. We’re still on that journey. It’s prudent to see what we can realize, before we go to the community and request a special rate variation.”
The council has nonetheless projected a $1.77m deficit next year. The council predicts it can get back into surplus by 2021-22, which is several years earlier than initially projected, even without the special rate variation.