Ratepayers to get small rates credit

Will avoid breach of annual charges cap

Will avoid breach of annual charges cap

Gisborne District Council Offices. File picture

RATEPAYERS will get a $30 credit on their rates bill for the final quarter of this financial year if a committee recommendation is adopted. But the council will lose $650,000 in revenue.

The performance, audit and risk committee has recommended resetting the rate for the uniform annual general charge (UAGC) for this financial year. The recommendation will be put to the full council meeting on May 19.

The resetting is necessary because the council could possibly exceed the 30 percent cap on the amount it can collect annually from the uniform charge.

Would mean one-month delay in rate invoice

The decision will mean a one-month delay in sending out final rates invoices and a decrease of $30, plus GST, per property rated for UAGC. Invoices will be sent to ratepayers at the end of May for the final instalment to be paid by June 20.

“The deferment would not have any material effect on rates collection as it would still be completed by the end of the financial year,” said operations group manager Barry Vryenhoek.

Tight time constraints and human error during the review of the revenue and financing policy, in time for adopting the 2015-25 long-term plan, had led to a miscalculation of rating for the 30 percent cap from certain fixed rates.

'Potential calculation error'

“The 2015/16 rates modelling was subject to external peer review and internal quality checks that had not picked up the potential calculation error. If the instalments were sent out as normal, the income gained would be more than the legal 30 percent uniform cap by 1.2 percent.”

By law, council revenue from UAGC and other certain fixed rates cannot be more than 30 percent of its total rates income.

“The finance team have identified the potential breach in time to take steps to remedy it before it could become an issue.”

Counteracting future risk

Mr Vryenhoek said the error was picked up during comparisons of modelling prepared for the 2016/17 financial year.

“More external support, a stringent internal review of the rates-setting process and sign-off procedures, as well as high-level training for staff, will be in place to counteract any future risk.”

The resetting of rates would reduce the council’s forecast income by approximately $652,000 but was unlikely to affect budgets or capital expenditure.

“The amount is small enough to be managed within existing activity surpluses and offset by positive variances in other income sources,” said Mr Vryenhoek.

Rubbish stickers will still be sent out to ratepayers as normal from this week.

Mistake regretted

Chief executive Judy Campbell said the mistake was regretted.

“This is a mistake and we apologise for the mistake,” she said.

The council was forgoing the income — it was not being moved out of other rates.

The council had managed its way around the $625,000 loss of income, the surpluses that would have existed, the debt it could have taken in and the fact it would not have had to pay interest.

Craig Bauld said a mistake had been made but checks and balances picked it up, which was good.

RATEPAYERS will get a $30 credit on their rates bill for the final quarter of this financial year if a committee recommendation is adopted. But the council will lose $650,000 in revenue.

The performance, audit and risk committee has recommended resetting the rate for the uniform annual general charge (UAGC) for this financial year. The recommendation will be put to the full council meeting on May 19.

The resetting is necessary because the council could possibly exceed the 30 percent cap on the amount it can collect annually from the uniform charge.

Would mean one-month delay in rate invoice

The decision will mean a one-month delay in sending out final rates invoices and a decrease of $30, plus GST, per property rated for UAGC. Invoices will be sent to ratepayers at the end of May for the final instalment to be paid by June 20.

“The deferment would not have any material effect on rates collection as it would still be completed by the end of the financial year,” said operations group manager Barry Vryenhoek.

Tight time constraints and human error during the review of the revenue and financing policy, in time for adopting the 2015-25 long-term plan, had led to a miscalculation of rating for the 30 percent cap from certain fixed rates.

'Potential calculation error'

“The 2015/16 rates modelling was subject to external peer review and internal quality checks that had not picked up the potential calculation error. If the instalments were sent out as normal, the income gained would be more than the legal 30 percent uniform cap by 1.2 percent.”

By law, council revenue from UAGC and other certain fixed rates cannot be more than 30 percent of its total rates income.

“The finance team have identified the potential breach in time to take steps to remedy it before it could become an issue.”

Counteracting future risk

Mr Vryenhoek said the error was picked up during comparisons of modelling prepared for the 2016/17 financial year.

“More external support, a stringent internal review of the rates-setting process and sign-off procedures, as well as high-level training for staff, will be in place to counteract any future risk.”

The resetting of rates would reduce the council’s forecast income by approximately $652,000 but was unlikely to affect budgets or capital expenditure.

“The amount is small enough to be managed within existing activity surpluses and offset by positive variances in other income sources,” said Mr Vryenhoek.

Rubbish stickers will still be sent out to ratepayers as normal from this week.

Mistake regretted

Chief executive Judy Campbell said the mistake was regretted.

“This is a mistake and we apologise for the mistake,” she said.

The council was forgoing the income — it was not being moved out of other rates.

The council had managed its way around the $625,000 loss of income, the surpluses that would have existed, the debt it could have taken in and the fact it would not have had to pay interest.

Craig Bauld said a mistake had been made but checks and balances picked it up, which was good.

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