Debt falls as projects unfinished
Every man, woman and child in Palmerston North would have to find $1119 if the city council decided to repay all its loans.
The council’s total debt has fallen to its lowest level in four years, sitting at $95.7 million, according to the council’s draft annual report.
The debt was forecast to have increased to $114.7m by the end of the financial year.
In context, the council’s debt is more than its annual rates income of $83.5m, but less than its total income of $110m.
Its borrowing is supported by assets valued at $1200m.
The debt breaks down to $2934 for every rateable property in the city, or $1119 for every resident.
The report showed the council ended the year with a surplus of nearly $2.6m.
That helped it to put more than $6.5m toward paying debt, as well as the $5.2m it had budgeted to repay – a total of $11.8m.
In turn, the repayments eased the burden of interest costs, down by $1.6m against the budget.
Acting chief executive Ray Swadel said the council’s healthy finances could be attributed, in part, to increased revenue from regulatory services, higher than expected subsidies from the New Zealand Transport Agency, and other external and central government funding.
But the reduced debt was largely because of delays in spending on capital projects.
Out of a $52.3m capital budget, only $30.9m was spent, although that was ahead of the $23m spent in 2014/15.
Some of the projects were waiting for approvals or money from outside the council before they could go ahead.
Projects lagging behind timetable included the Junior Road Safety Park, Papaioea social housing project, Wildbase Recovery (which has just been given the green light to call for tenders), the James Line upgrade, as well as sections of the Manawatu River shared-pathway development.
Chief financial officer Grant Elliott said while debt was lower than budgeted, that could be a temporary thing.
‘‘When these capital projects are carried out, debt levels will rise.’’
On the other side of the ledger, the council is carrying a $2.9m loan to Manfeild Park Trust, which has grown from a $2.5m loan provided in 2008.
During 2015, the council agreed to extend the date to start paying it back by two years. The council pays for renewal of existing capital assets from operating revenue, not borrowing.
The biggest spender in the council’s range of activities was leisure, soaking up $32.6m.
That was followed by roading and parking, $17.7m, leadership (including review of the District Plan), $8.7m, wastewater, $7.8m and water, $7.1m.
The council’s credit rating remained high, with Standard and Poor’s continuing its AA long-term classification.
Chief executive Paddy Clifford’s pay increased during the year to $388,133.
Eight staff are paid more than $160,000, up from four last year.
In total, 110 of the council’s employees are on six-figure salaries, up from 103 the year before.
There are 320 staff on less than $60,000, down from 341 the previous year.
The total bill for paying the mayor and councillors was nearly $909,000.
The council was expected to adopt the final version of the annual report, already examined by Audit NZ, on Monday.