Cardinia Shire Council is now turning to more borrowing to cover their increasingly tight budgets, with the next council term to be burdened by a doubling of debt equal to a third of total revenue.
The council’s latest performance review was published in last week’s meeting, showing an increasing turn to borrowing as revenue continues to dry up and the council is more and more burdened by climbing expenses.
By 2029, the council is likely to draw more than double in loans to equal just under half of total rates revenue.
“Financial decisions we make for the next few years regarding assets, expenditure, have a trade-off,” Cr Nickell said during last week’s council meeting.
“We are gonna to keep our ability to generate income flat and not hit our ratepayers with ever-increasing rates. There is a debt to be paid for that, literally, and that is my concern for the future.”
Interest-bearing loans will equal 49 per cent of total rate revenue, which currently sits around $100 million per year and has increased by five per cent per annum in recent years.
This is a significant jump from this year where loans and borrowing equate only 14 per cent of total rate revenue.
Overall debt will double by 2029 with liabilities equal to 35 per cent of total source revenue, compared to 16 per cent this year.
This figure includes long-term loans, the timing of maturing loans will only see a slight increase in the service of debt by 2029 with repayments equating to 11 per cent of rates revenue, an increase from just nine per cent this year. This figure is not projected beyond 2029.
The balance of the budget is forecast to remain around one per cent in deficit by 2029, an improvement from four per cent in the red last year.
“We are going okay, and I think other growth area councils who have the same sort of trajectory as us have been in much worse financial positions in the past, but it’s not a fait accompli, we still have to continue working hard at it,” Mayor Kowarzik said.
The figures fall within the council’s means, as a standard of loans being below 60 per cent of rate revenue is still met within the forecast.
It’s noted in the report that the increase in borrowing is due to covering the cost of infrastructure builds.
