The Tauranga City Council could be in line for an expected $10 million end-of-year surplus, according to its April financial performance for 10 months of the financial year.

Revenue exceeds operating expenditure year to date by $12m, the TCC's Finance and Risk committee heard recently. The figure is well above the expected difference of $5.4m, primarily because of the timing of capital grants, and below budget depreciation.

Photo: File.

Other revenue year to date is $2.8m above budget, due to an unbudgeted capital contribution from the Port of Tauranga to pay for storm water work undertaken by council on their behalf. It can also be attributed to higher building services and property lease revenue, which offsets income that has been deferred from forestry harvesting.

More revenue for the full year is expected to be below budget because the $2.5m for the marine precinct from the Regional Infrastructure Fund is being received in 2015/16 when the capital work is scheduled to be undertaken. This delayed revenue is partly offset by above budget revenue from property leases and building services, leading to other revenue being forecast to be $500,000 below budget.

Lower interest and depreciation costs mean a $2.2m in operational activities is projected. The 'surplus” of revenue above operating expenditure will be spent on capital infrastructure this year.

Not all of the savings impact on rates. The rates-funded components will be used to fund unbudgeted building and associated accommodation costs, projected to be more than $1m, resulting from the mouldy, leaky council buildings.

Council spending is expected to be below budget for the full year because of lower-than-budgeted depreciation in transportation, water and park activities.

A change in the way Bay Venues Ltd renewals are funded means a reserve has been established within the TCC accounts for BVL asset renewals and the operating grant to cover depreciation is not being paid to BVL as budgeted.

Asset development revenue has been revised upward, reflecting higher development contributions year to date and the value of vested land under roads. Vested land under roads doesn't result in ongoing depreciation or operating costs.

The capital programme is below budget year to date and delays in delivery of significant projects mean the programme is currently projected to be 85 per cent spent for the full year. That's based on $12.4m of carry forward in three major projects: Southern Pipeline, Marine Precinct and Greerton Library. The downward adjustment from the March projection of 87 per cent expenditure is due to a revision of expected timing of the purchase of the marine precinct travel lift from June to July 2015.

The monthly report states that surplus property sales worth $11.7m are expected for the financial year, but by the end of April sale proceeds totalled $3.5m, with forecast total sales of $6.9m to be completed by June 30 and the balance is proposed to be rebudgeted to later years. It looks as if we are to be around $4m behind budget.

Property sales are always interesting and were covered briefly in Long Term Plan (LTP) deliberations when staff were pushed heavily on the forecasts around these issues.

'It often happens that after a property is identified as surplus to requirements there is a push back from the community when it comes time to sell them,” says TCC councillor and committee chairman John Robson.

'There's an assumption that if it becomes political issue the elected members the councillors will ‘hold the line.' At one level every asset sale is political. Someone will identify a reason why we should keep hold of it.

'But there are some things that do become surplus to requirements; the growth isn't where it is expected to be, or you have done your needs analysis and you have more land.”

This is what has been happening with the active reserves. Some land, such as the Oropi Reserve, is no longer required as an active reserve.

The net debt at year end has been revised downward to $310m as a result of additional development contribution revenue, capital expenditure carry forwards and expenditure timing. This is a favourable balance of $87.8m.

Ratepayers are paying rates ahead of schedule with $95.2m received, which is $100,000 ahead of expectation.

Operational spending is $142.3m, $4.7m less than budgeted. The debt to revenue ratio is 170 per cent – 47 per cent favourable over the full year.