Where does the money come from?
It takes a lot of money to make the Rural City of Wangaratta tick – about $80 million each year. Our Revenue and Rating Plan explains how we determine the revenue needed to fund our activities and how the funding will be distributed between ratepayers and other users of our facilities and services.
What is in the pie?
We collect money from:
- Rates
- Waste charges
- Government grants
- User fees
- Statutory fees and charges
- Contributions
- Other income, e.g. sale of assets, interest on investments
- Borrowings
How do we grow the pie?
We can increase the size of the pie by:
- Growing the local economy – encouraging and supporting new residential development, business growth, starting new businesses
- Increasing user fees – increasing fees above price inflation and removing any pricing subsidies
- Decreasing operating and capital expenditure – reducing the frequency or quality of services to our community or disposing of community assets
- Increasing borrowings – using debt to fund new infrastructure and development and not to cover operational costs.
Our Financial Plan balances items 1, 2 and 4. We have a continued focus on productivity and efficiency, which allow us to maintain our current service delivery standards, increase levels of service in our focus areas where necessary, and meet our asset management obligations.
No service level reductions or disposal of community assets are specifically factored into our Financial Plan.
What’s the plan for increasing rates?
Our Financial Plan has a long-term assumption that the annual Rate Cap will be 2%. We expect a 1.25% growth in our rating base due to new residential development, subdivisions or capital improvements across the local economy.
We are currently undertaking a Financial Sustainability Program in order to strengthen our long-term financial outlook. Through this program, Council will make every possible effort to generate its own savings and benefits and avoid the need for a higher rate cap. A rate cap variation is an option we may need to consider in the future, however it is not a feature of our 10 year Financial Plan.
You can understand more about the impact in our Financial Plan of changes in these assumptions – go to Forecasting Assumptions.
What’s the plan for borrowing?
Borrowing money to fund investments in assets is a critical part of how we fund our activities, in particular our new capital investments. We would be unable to meet the needs and preferences for growth of the municipality without borrowing. Borrowing enables us to smooth the cost out over the next few years and balance it across generations.
Affordability of borrowings is important, and our most recent borrowing has a 10 year fixed interest rate of 0.69%. This means our cost of servicing the debt is very low, especially given price inflation will likely exceed the cost of this debt.
Keeping some ability to borrow in the future is referred to as “headroom” – it’s the difference between our proposed debt limit and the debt limit adopted in our Borrowings Policy (indebtedness ratio of 60%).
The indebtedness ratio is only one of three indicators we review and manage when assessing our ability to borrow and meet our operating and capital cash flow requirements. Councils typically have a low-risk profile for financing indicators, which means the 60% ratio reflects an overall conservatism. Our current borrowings exceed the 60% ratio following our delivery of some major capital projects, such as the Railway Precinct regeneration and Aquatics Centre Expansion program. We are assessed as low risk on the other two indicators.
Council will repay a $9.854m interest only loan in 2026 and our headroom substantially increases after this.
The Financial Plan proposes new borrowings of $4.4 million to help fund CBD Masterplan works, Wareena Park Masterplan improvements and new infrastructure to support the residential growth areas of North West Wangaratta.
The borrowings for these projects will be confirmed as part of Council’s annual budget process as we get closer to spending the money.