Buller District Council

Media Release – Profit no windfall

5th May, 2020

Buller District Council says the projected $925,000 ‘profit’ as stated in the draft Annual Plan is not a windfall.

Mayor Jamie Cleine says the $952,000 ‘profit’ does not mean the Council made money at the expense of the ratepayer.

“In simple terms under required accounting standards, the revenue of Council contains subsidies for capital expenditure including New Zealand Transport Authority (NZTA) roading subsidies and a budgeted capital subsidy to build the Reefton toilets.

The capital subsidies don’t have a corresponding item in the expense side of the forecast as the funds are spent on capital expenditure which is not allowed to be included in the forecast profit and loss statement, under accounting rules. As a result, there is a mismatch resulting in projected ‘profit’.”

If capital subsidies were not included as revenue Council would make a projected sizeable loss of around $1.6m in the next financial year, this is mainly because it does not fully fund depreciation on roading assets.

 

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