The Queenstown Lakes District Council ran behind its operating budget for the first half of this financial year by more than $2 million, which may mean it has to borrow to cover any final deficit.
Accounting manager Ian Stewart presented the council's financial statement for the period July 1, 2009, to December 31, 2009, to the council's finance and corporate accountability committee yesterday, telling it the half-yearly result was caused by lower operating revenue than planned for.
QLDC finance manager Stewart Burns later confirmed to the Otago Daily Times this could lead to the council taking up loans to cover a deficit.
Mr Stewart told the committee the operating revenue was $2.3 million behind budget, mainly caused by lower income from user charges and development contributions.
The development contributions revenue of $3.4 million was $1.4 million less than budgeted due to lower income from consents, as development slowed down.
Mr Burns pointed out the council was still waiting for the development contribution from the Kawarau Falls development, which was due to be paid in the next six months.
He expected this would cover most of the deficit in the consents area.
User charges for the year to date were $5.2 million, $1.2 million less than budgeted for.
"The lower user charges are mainly caused by reduced volumes of residual waste.
"With lower volumes of waste going to landfill, we have lower costs, but also lower income in this area," Mr Stewart said.
Mr Burns said the council had done its best to reduce expenses in this area, but the revenue would end up falling more than the costs.
"As a worst case scenario, we could end up with a deficit for waste management of about $450,000 by the end of the year.
"If this is the case, I will be recommending to the council to cover such a deficit by a loan, rather than by increasing the user charges," Mr Burns said.
Mayor Clive Geddes said it was extremely difficult to budget for income related to development by other parties.
"We have downgraded the budget expectations in this area for the past two years, but apparently not enough."
He would not speculate on whether a loan would be necessary until he had seen the final figures, but called the potential deficit "the price for success".
"The council is working towards a zero waste policy, but we had never expected the volume of waste to drop by more than 10,000 tonnes in the past year.
"We will now hold discussions with the waste providers to understand this area better, and then the council will have to decide on how we meet the reduced income from waste," he said.
Other areas pulling the council into the red were lower income from rates and higher costs for governance, community services, roading, parking, resource management and regulatory services.
On the other hand, the council received above-budget revenue from grants and subsidies and benefited from lower costs for property services, utilities and overheads.
Mr Stewart said the council had only reached 40% of its budgeted operating revenue during the first half of the financial year.
Committee members acknowledged the blowout in the operating budget was mainly due to timing issues for payments, a situation which would partially be resolved before the end of the financial year, and the committee unanimously received the financial report.
Mr Burns said he was satisfied with the council's six-monthly finance report, despite the fact it was behind budget.
