Rotorua Lakes Council blows out budget by $2m

The budget report will be discussed in Thursday's Operations and Monitoring Committee meeting.

The Rotorua Lakes Council has blown out its budget by more than $2m, citing the museum's closure, storm repairs and transitional costs of the new waste collection as the main reasons.

A report for the council's financial performance for the 11 months ending May 31 shows the council ended the period $2,002,000 over budget.

The forecast for the year-end operating result, ending June 30, stated the council would likely end the year $2.3m behind budget.

In the report it was anticipated by June 30 the closure of the museum would result in a shortfall of $1m and the storm remedial work would add another $400,000 to the shortfall.

The balance relates to the transition costs for waste collection which were partially offset by efficiencies in other areas.

At the time the report was written it was anticipated the council would borrow
about $5.5m by the end of June, despite signalling in the annual plan there would be no increase in borrowings for the year.

However, there is "keen interest in a number of commercial and residential properties that are no longer required and these should result in sales in the new financial year which will be used to help repay this debt increase".

The Rotorua Daily Post requested further clarification about how much the council had borrowed, but a council spokeswoman said it would not be appropriate to provide an update before elected members had received it.

The report will be discussed in tomorrow's Operations and Monitoring Committee meeting.

It states the council's financial position was affected by increased costs during May, including the unforeseen costs of remedial work relating to recent storms and the ongoing impact of the closure of Rotorua Museum.

"The closure was at the start of the tourist season and to date the loss of income and costs associated with its closure had $950,000 negative impact to the council's operating result," the report read.

Based on the current level of expenditure, the forecast was expected to worsen to a $1m shortfall by June 30.

However, revenues excluding the museum continue to track ahead of budget with most activities on budget.