Special Rate Variation - Application

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From 1 July 2022 Council will implement a special rate variation for the Snowy Valleys Council Local Government Area.

IPART approved a new and permanent Special Rate Variation of 35.95% (inclusive of the rate peg) introduced over two years in 2022-23 and 2023-24.

At the June 2022 Council Meeting, Council resolved to increase rating income for 2022-23 by 15.7%.

The increase is applied to only the ordinary rate item on your rates notice and does not apply to waste management or sewer charges that may also be on your rates notice. In making the rates and annual charges for 2022-23 Council is required to apply the NSW Valuer General’s land values as at 1 July 2019.

The rates calculator can estimate the change to rates for individual properties using the assessment number provided on rate notices. link

The increased rating level at the completion of 2023-24 will then remain permanently and be the amount subject to any future increases.

The approved purpose of the SRV is to:

  • Continue delivering existing service levels, as outlined in the 2022-23 Delivery Program and Operational Plan
  • Manage a range of financial impacts (e.g. maintenance of grant-funded new assets and natural disasters)
  • Ensure long-term financial sustainability

Detailed information relating to the operational and long term budgets, projects, services and actions Council will be completing during 2022-23 is contained within Council’s Integrated Planning and Reporting suite of documents. link

Why an SRV

Council’s income base from rates is fixed. Any increase is limited to an annual ‘rate peg’ amount set by the State Government of between 1.5% and 2.5%.

As the cost to deliver services and maintain community assets increases above the rate peg amount each year, so does the pressure on Council’s income to continue to deliver the same services for less.

The SRV is a tool used by local government to adjust Council’s fixed income base when reducing operating expenditure alone does not balance the budget.

Council is not ‘broke’ or in debt. Council has $36M in cash (including reserves and unrestricted cash) and investments at the end of September 2021 and has minimal borrowings.

Applying for an SRV does not mean Council has ‘run out of money’. However, it is indicating that the gap between the increasing cost to deliver services and the fixed amount of income is widening and will require adjustment before significant issues occur.

The Local Government Act requires councils to apply sound financial management principles of being responsible and sustainable in aligning income, expenses and infrastructure investment with effective financial and asset management performance management.

This includes working to achieve a fully funded operating position (a balanced budget).

Why have we not been able to reduce costs?

The implementation requirements for establishing a new organisation and decisions to continue to deliver grant funded assets to increase the liveability and amenity of the region have, over time, combined with external influences such as rising costs and unexpected expenditure associated with bushfire and pandemic. These factors have gradually led to the problem which Council is now addressing.

The following issues continue to challenge Council’s ability to ‘spend within its means’:

  • Receiving significant grant funding for new and upgraded assets since 2016, which increases the cost by an estimated $460,000 per year to maintain and renew these assets over their lifetime (maintenance and depreciation costs)
  • Maintaining staffing numbers, determined and regulated as part of merger obligations by the NSW Government, across the two former LGAs which impacts Council’s ability to deliver a reduced organisational structure and service models
  • Delivering on community expectations to provide consistent assets and service levels across the towns and villages in the LGA
  • Limited asset and service consolidation opportunities due to the geography and LGA size
  • Maintaining the current level of spending on asset renewal to ensure continuing good condition of Council’s asset base
  • Increasing services to deliver parity in service delivery across the LGA following amalgamation.

Council considered a number of options to create a path to sustainability from 2022 onwards.

Council also engaged Morrison Low Consultants to:

  • review Council’s current baseline budget and financial forecasts
  • assess the contributors to Council’s financial sustainability challenges
  • independently assess and provide independent advice on the long-term financial sustainability of Council
  • provide advice on options to close any financial sustainability gap
  • provide information to the Snowy Valleys community and facilitate the community engagement process
  • As a result of the information assessment and community consultation, advise Council on the options to become financially sustainable

The Background Papers produced by Morrison Low, and information and results of previous community consultation is all available to download from the Information section on this site.

Action

Review the background information and proposed options

Download the Rates Calculator to review the impact on your property


From 1 July 2022 Council will implement a special rate variation for the Snowy Valleys Council Local Government Area.

IPART approved a new and permanent Special Rate Variation of 35.95% (inclusive of the rate peg) introduced over two years in 2022-23 and 2023-24.

At the June 2022 Council Meeting, Council resolved to increase rating income for 2022-23 by 15.7%.

The increase is applied to only the ordinary rate item on your rates notice and does not apply to waste management or sewer charges that may also be on your rates notice. In making the rates and annual charges for 2022-23 Council is required to apply the NSW Valuer General’s land values as at 1 July 2019.

The rates calculator can estimate the change to rates for individual properties using the assessment number provided on rate notices. link

The increased rating level at the completion of 2023-24 will then remain permanently and be the amount subject to any future increases.

The approved purpose of the SRV is to:

  • Continue delivering existing service levels, as outlined in the 2022-23 Delivery Program and Operational Plan
  • Manage a range of financial impacts (e.g. maintenance of grant-funded new assets and natural disasters)
  • Ensure long-term financial sustainability

Detailed information relating to the operational and long term budgets, projects, services and actions Council will be completing during 2022-23 is contained within Council’s Integrated Planning and Reporting suite of documents. link

Why an SRV

Council’s income base from rates is fixed. Any increase is limited to an annual ‘rate peg’ amount set by the State Government of between 1.5% and 2.5%.

As the cost to deliver services and maintain community assets increases above the rate peg amount each year, so does the pressure on Council’s income to continue to deliver the same services for less.

The SRV is a tool used by local government to adjust Council’s fixed income base when reducing operating expenditure alone does not balance the budget.

Council is not ‘broke’ or in debt. Council has $36M in cash (including reserves and unrestricted cash) and investments at the end of September 2021 and has minimal borrowings.

Applying for an SRV does not mean Council has ‘run out of money’. However, it is indicating that the gap between the increasing cost to deliver services and the fixed amount of income is widening and will require adjustment before significant issues occur.

The Local Government Act requires councils to apply sound financial management principles of being responsible and sustainable in aligning income, expenses and infrastructure investment with effective financial and asset management performance management.

This includes working to achieve a fully funded operating position (a balanced budget).

Why have we not been able to reduce costs?

The implementation requirements for establishing a new organisation and decisions to continue to deliver grant funded assets to increase the liveability and amenity of the region have, over time, combined with external influences such as rising costs and unexpected expenditure associated with bushfire and pandemic. These factors have gradually led to the problem which Council is now addressing.

The following issues continue to challenge Council’s ability to ‘spend within its means’:

  • Receiving significant grant funding for new and upgraded assets since 2016, which increases the cost by an estimated $460,000 per year to maintain and renew these assets over their lifetime (maintenance and depreciation costs)
  • Maintaining staffing numbers, determined and regulated as part of merger obligations by the NSW Government, across the two former LGAs which impacts Council’s ability to deliver a reduced organisational structure and service models
  • Delivering on community expectations to provide consistent assets and service levels across the towns and villages in the LGA
  • Limited asset and service consolidation opportunities due to the geography and LGA size
  • Maintaining the current level of spending on asset renewal to ensure continuing good condition of Council’s asset base
  • Increasing services to deliver parity in service delivery across the LGA following amalgamation.

Council considered a number of options to create a path to sustainability from 2022 onwards.

Council also engaged Morrison Low Consultants to:

  • review Council’s current baseline budget and financial forecasts
  • assess the contributors to Council’s financial sustainability challenges
  • independently assess and provide independent advice on the long-term financial sustainability of Council
  • provide advice on options to close any financial sustainability gap
  • provide information to the Snowy Valleys community and facilitate the community engagement process
  • As a result of the information assessment and community consultation, advise Council on the options to become financially sustainable

The Background Papers produced by Morrison Low, and information and results of previous community consultation is all available to download from the Information section on this site.

Action

Review the background information and proposed options

Download the Rates Calculator to review the impact on your property


  • IPART Approves SRV Application

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    On the 10 of May 2022 IPART approved Council's special variation application to increase its income above the rate peg of 15.7% in 2022/23 (including the rate peg) and 17.5% in 2023/24 (including the rate peg).

    IPART gave approval for a Permanent increase of:

    • 15.7% in 2022-23
    • 17.5% in 2023-24

    = 35.95% cumulative permanent increase over 2 years, applied across all rating categories.

    The Approved Purpose of the SRV is:

    • Continue delivering existing service levels without a significant reduction
    • manage a range of financial impacts (e.g. maintenance of grant-funded new assets and natural disasters)
    • ensure long-term financial sustainability

    Click here to view IPART's Final Report

    Details about council’s proposal can be found on IPART’s website.

    https://www.ipart.nsw.gov.au/Home/Industries/Local-Government/Reviews/Special-Variations-Minimum-Rates/Special-Variations-Minimum-Rates-2022-23

  • Council Reviews Community Feedback

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    From July to September 2021 Council undertook community consultation and received feedback from the community regarding the potential introduction of a Special Rate Variation (SRV).

    After reviewing this feedback and budget and financial forecast advice from Morrison Low at the October Council Meeting, Council resolved to lodge a Notice of Intent to Apply for a Special Rate Variation with the Independent Pricing and Regulatory Tribunal before November 2021 for an SRV of 17.5% in 2022/23 and 17.5% in 2023/24.

    The decision instructed Council staff to:

    • proceed with the development of an application for consideration by the new Council in January 2022
    • develop and deliver information and opportunities for feedback to the community on the SRV of 17.5%+17.5% (including rate peg) between 25 October and 28 November 2021
    • place the updated Long-Term Financial Plan reflecting the proposed SRV on public exhibition
    • develop a report on the community consultation outcomes, along with the completed Special Variation Application for consideration and determination of an application for a Special Rate Variation by Councillors at the January 2022 Council meeting.

    At the January 2022 Council Meeting, Council resolved to lodge the application for a Special Rate Variation. IPART will now review the application and provide the community with opportunities for feedback before making a decision in May 2022.

  • Special Rate Variation - application detail

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    The cumulative effect of a 15.7% in 2022/23 (including the rate peg) and 17.5% in 2023/24 (including the rate peg), representing a total cumulative increase of 38.06% over the two-year period. The increased rate income at the completion of 2023-24 will remain permanently within the rate base.

    The impact of the SRV on the average rate overall and per category is listed below. A rates calculator is available from this website to allow you to review the impact of the proposed SRV on your annual rates bill.

    The SRV (including rate peg) will raise additional rates income of $1.35M in year 1 and $2.97M in year 2. This equates to an annual increase of approximately $183 and $397 on the average rate.

    In addition, Council will pursue productivity savings through employee cost savings of $600K annually in 2022/23 and 2023/24, and continue to implement actions of the Financial Sustainability Plan to create permanent reductions to ongoing expenditure.

    The proposed SRV requires only minimal service level adjustments to community services.

    The proposed SRV will allow Council to:

    • maintain service levels as close as possible to current levels,
    • fund ongoing maintenance,
    • fund renewal of infrastructure assets,
    • increase capacity to renew deteriorating assets,
    • ensure and improve financial sustainability,
    • reduce reliance on external grant funding for asset renewals.
Page last updated: 21 Jun 2022, 08:44 AM