Budget and rates

What is Council's budget and what does it have to do with rates?

Mitchell Shire Council's 2015/16 Budget was adopted in June following community consultation and community meetings across the municipality in April. Thirteen submissions were received.

The budget focuses on preparing for growth, delivering efficient services, investing in a modest capital works program and supporting ongoing plans to restore financial sustainability.

Council will collect $36 million in rates and charges to help fund the services and capital works outlined in the budget.

This is an extra $2.6 million compared to last year. This extra $2.6 million is being used to replenish cash reserves, fund our capital works program and for depreciation. Less than $10,000 is being used to fund operating costs such as staff, utilities and contracts.

The increase in general rates is shared across more than 18,000 properties including 1146 agricultural properties. Agricultural properties receive a 10 to 20 per cent lower rate compared to most other property types.

Kerbside waste collection and municipal charges remain unchanged.

The budget also includes some new borrowings for major capital works plus income from government grants as well as user fees and other charges.

Rates explained

How much extra in rates will each property pay?

Rates are based on capital improved value and property type.

Mitchell Shire Council has a number of different property types. Each property receives a general rate. Some properties will also receive a kerbside garbage and recycling collection charge and a municipal charge. The kerbside and municipal charges have not increased this year.

  • A residential property worth $300,000 will pay an extra $1.94 a week.
  • A commercial property worth $300,000 will pay an extra $1.94 a week.
  • A small agricultural property worth $500,000 will pay an extra $2.90 a week.
  • A large agricultural property worth $1 million will pay an extra $5.17 a week.
  • A residential property worth $1 million will pay an extra $6.46 a week.
  • A vacant property worth $1 million will pay an extra $12.92 a week.

Why are my rates going up by 9.74% or 9.75% not 6.9%?

The rate in the dollar (which is used to calculate general rates) has increased by 9.75 percent for general, vacant and subdivisional land and 9.74% for rural agricultural land (40-100 hectares and 100+ hectares).

In most cases, this general rate charge will only make up part of the rate notice.Your rates may also include a kerbside collection charge and a municipal charge.

The kerbside ($305) and municipal charges ($299) have not changed.

The general rate component has changed by 9.74% and 9.75% depending on your property type.



Why are rates based on the value of my property not the services I use?

Council rates are essentially a tax based on the value of your property, not the services that you use.

Councils are required by State legislation to use property values as the basis for calculating how much each property owner pays in rates.  

In Victoria, council rates can comprise up to three components:

•   municipal charge (of not more than 20 per cent of a council’s total rates revenue)
•   waste management (garbage) charge
•   rate in the dollar.

Councils also collect the Fire Services Levy on behalf of the State Government.


Are Mitchell Shire Council's rates the highest in the state?


No. Mitchell Shire Council's average rates are $1958 compared to the state average of $1819.

The lowest in the state is $1259 and the highest in the state is $2610.

Why do rates increase by more than CPI?

Council rate increases are often compared to CPI, however the two are very different.

CPI measures a standard basket of household goods such as bread, milk and electricity.

A majority of council spending is targeted towards maintaining and renewing community infrastructure such as roads, bridges, sporting facilities and buildings; as well as delivering human services such as aged care programs, maternal and child health, and child care to communities. 

These costs are very different to the costs of household goods. A ‘basket’ of common council services is primarily affected by the growth in construction, materials and wage costs, not CPI.

Councils also experience other external cost pressures such as reduced government funding, ageing infrastructure and growth.

Do the rates that are generated from my area get spent back in my area?

Not necessarily. Council has a responsibility under the Local Government Act to provide services and infrastructure across the entire municipality. Budgets are set based on balancing community needs and expectations across our rural and urban communities and across township and rural areas. Projects and services are prioritised based on need not on location or on rates generated from a particular area. 

Debt and financial indicators

Are debt levels sustainable?

Yes.

Debt levels are monitored by the Victorian Auditor General (VAGO). They have assessed us as being medium risk. This means that we have a reasonable ability to repay debt from our own revenue.

Over the four years of our Strategic Resource Plan our indebtedness ratio is improving.

Why does Council have debt?

Loans are used to fund major capital works projects. People use these assets for many years. Borrowing for larger projects helps spread this cost over a number of years.

For example, Council has agreed to borrow up to $4.75 million in 2015/16 for strategic land purchases in the south of the municipality and for the Seymour Flood Levee in the north.

I've heard Council has an underlying operating deficit. Should I be concerned?

Council does have an underlying operating deficit this year and has done for the past seven years.

This is not sustainable in the long term. Our future projections will see this improve over time.


Staff and operating costs

Why are staff costs such a large part of the budget?

Mitchell Shire Council has 281 full time equivalent staff in the 2015/16 budget to serve nearly 40 communities and 40,000 residents.

Our staff budget is $23.34 million.

A restructure in 2014/15 has delivered $1.9 million in savings from previous staffing cost projections.

Many Council services such as maternal and child health, kindergartens and leisure centres have staffing levels set under legislation.