$26 million cash reserve explained

RATES campaigner Ralph Gallagher posed a number of written questions after South Gippsland’s Shire Council’s June 27 meeting, in regard to the local government’s apparent “cash in hand” wealth.

Can you please describe the purpose of Council’s “cash in hand” of $26M? What is the purpose of such a substantial holding? At what point did Council decide that such an amount could rightfully be accumulated? Over what period has this fund been accumulated?
Mr Gallagher has long argued for a better deal for ratepayers, with less money in Council’s coffers and more in the pockets of residents (especially those who have the least capacity to pay).

Council CEO Tim Tamlin explained Council’s position, reading from a scripted answer to the question.

“Cash and cash equivalents was $23.765M at the end of the financial year to 30 June 2018. This balance was bolstered by the receipt of a cash payment of $4.8M from the Victorian Grants Commission, which is part of Council’s annual operating grant funding from the State Government being received in advance of the 2018/19 financial year,” he said.

“This is required to fund planned 2018/19 operating expenditure. Cash is budgeted to reduce by $10.372M during the 2018/19 financial year, with $13.393M anticipated on hand at 30 June 2019 and $7.204M on hand at 30 June 2020, with significant capital expenditure budgeted by Council across these periods.

“Cash and cash equivalents held by Council at 30 June 2018 are restricted in part. Of the $23.765M forecast at 30 June 2018, $6.931M is held to fund carry forward capital works from the prior year, $.899M is held in trust funds and deposits, and $4.555M is held in discretionary reserves with these funds specifically earmarked for future use based on previous Council decisions.

“This leaves $11.380M of funds available to meet daily cash flow requirements, unexpected short term needs and any budget commitments which will be expended in the next financial year.  Council regards these funds as the minimum necessary to ensure that it can meet its commitments as and when they fall due without borrowing further funds.”

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