Revenue & Financing Policy
Table One outlines the Council’s policies in relation to the funding sources detailed in Section 103 of the Act. Table Two summarises the Council assessment of the matters that need to be considered as part of section 101(3) of the Act.
Overall Funding Considerations
Introduction The Local Government Act 2002 requires the adoption of Revenue and Financing policy, which outlines Council policy in regard to the funding of operating and capital expenditure from various revenue sources as detailed in the Act (Section 103). The purpose of this policy is to provide predictability and certainty about sources and levels of funding. (Section 101) of the Act requires more specific analysis in deciding the most appropriate funding source for each activity. The Council must consider the following: The community outcomes to which the activity primarily contributes; The distribution of benefits between the community as a whole, any identifiable part of the community, and individuals; The period in or over which those benefits are expected to occur; The extent to which the actions or inaction of particular individuals or a group contribute to the need to undertake the activity; and
Once the matters referred to in section 101(3) (a) have been completed, a picture emerges of how different parts of the community benefit from Councils services and an overall indicative allocation of costs is compiled. The indicative allocation of costs is then examined in the light of the overall considerations set out in section 101(3)(b). This section of the Act requires Council to consider the overall impact of any allocation of liability for revenue needs on the current and future social, economic, environmental and cultural wellbeing of the community. Elected member judgement is important at this point, because many of the benefit distribution assessments and resulting adjustments are subjective, and benefit from final assessment by community representatives. The Council have undertaken a number of rating reviews since local government reform in 1989. Due to the rural/urban mix of the district a system of rating within distinct rating areas, capturing general benefit patterns from Council activities has been accepted by the community and commended for its simple transparency (refer to the section on rating policy for more detail). Ranges are used to show who benefits and are in 25% increments up to 100%.
The costs and benefits, including consequences for transparency and accountability, of funding the activity distinctly from other activities.
Table three summarises the funding philosophy for each distinct rating area after elected member consideration of the overall impact of funding decisions on community wellbeing.
The last step in the process is to consolidate the results of the individual activity analyses in accordance with section 101(3)(b) of the Act.
Period in Which Benefits are Expected to Occur
Council’s Process for Applying These Legal Requirements This policy supersedes the Council’s Funding Policy first adopted in 1998/99 as required by the Local Government Amendment Act (No 3) 1996. A comprehensive review has not been undertaken and this policy incorporates the substance of the former policy.
When considering the period over which benefits are expected to occur, the Council treats operating costs as directly related to providing benefits in the year of expenditure. As such, they are appropriately funded on an annual basis from annual revenue. Assets purchased from capital expenditure are treated as providing benefits for the duration of their useful lives. These principles of funding operating and capital expenditure are as stated in the policy statement section of this policy below. They are assumed to apply to each activity, unless otherwise stated in Table 2.
LONG TERM PLAN 2021-2031 HASTINGS DISTRICT COUNCIL // 41
