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									          ENVIRONMENT POLICY DEVELOPMENT COMMITTEE

                                    7 AUGUST 2006

                         MEDIUM TERM BUDGET STRATEGY,

                                 AND 2007/08 BUDGET


SPECIFIC WARDS AFFECTED

All

EXEMPT/CONFIDENTIAL ITEM

No


1     PURPOSE OF THE REPORT

      To request the views of the Environment Policy Development Committee on the
      Medium Term Budget Strategy for 2007/08.

      Members are invited to give their views regarding service priorities for 2007/08 and
      therefore where expenditure should focused. Members are also requested to
      indicate those areas, which are not priorities, and to make suggestions to address
      the 2007/08 budget deficit.

2     BACKGROUND

2.1   The Cabinet report dated 2 August 2006 outlines the Medium Term Budget Strategy
      for 2007/08 – 2009/10 for the General Fund Revenue Budget. For the 2007/08
      financial year, the report makes the following assumptions:

             External support increase (RSG and NNDR Pool) of 2.7%
             Council Tax increase of 3.7%
             No use of balances / Collection Fund Surplus
             Planning Delivery Grant of £200,000

      No areas for growth and savings have been identified to balance the budget at this
      stage, and the ‘stand still’ position reveals a budget deficit of £604,000.

2.2   The Cabinet report assumes a 3.7% increase in Council Tax for all financial years.
      This is in line with the increase for 2006/07. At this stage it is considered that the
      Council Tax increase for 2007/08 will be no higher than 3.7% and, depending on
      budget pressures, will be set lower if possible. It is expected that the capping level
      will be 5% for 2007/08, in line with the level reported for 2006/07.

2.3   The following assumptions for increased expenditure have been made in the budget
      strategy:

           Pay awards – 3%


                                            1
            Pay Increments – Actual
            Superannuation Increase – 1.6%
            Housing Benefits Increase – 3%
            General Inflation – 2.5%;


2.4   The following assumptions have been made in respect of the income items included
      in the budget: -

      Investment Income

      Total investment income of £1,400,000, based on an average investment level of
      £25m for general cash flows, £6m for the LSVT capital receipt and an average
      interest rate of 4.5%. The Council’s investment income will now be reviewed further
      in light of the LSVT agreement and the resulting cash flow implications.

      Government Support

      The Government has introduced a three-year finance settlement process in part to
      assist local authorities with their medium term financial planning and to give greater
      stability to Council Tax levels. The new settlement process was introduced 1 year
      into the current financial cycle and Central Government have provided a two year
      settlement for the 2006/07 and 2007/08 financial years. The first full three year
      finance settlement will be for 2008/09 to 2010/11.

      The 2006/07 settlement resulted in an increase of 3% and the 2007/08 settlement
      will be a 2.7% increase. On this basis the 2008/09 and 2009/10 increases have
      been projected at 2.5%.

      Fees & Charges

      An inflationary increase of 2.5% on all fees and charges has been incorporated at
      this stage.

      The fees and charges will be reviewed as part of the budget setting process for
      2007/08. The scope for expanding services and introducing new charges will be
      reviewed and incorporated in the strategy during the process

2.5   The budget setting process commences with the base budget. The budget for
      2006/07 is used as the base budget and will be built upon in terms of inflationary
      pressures, service demands and saving/efficiency requirements. The 2006/07
      budget must also be re-examined in light of the Large Scale Voluntary Transfer
      (LSVT) agreement. The assumptions made during the 2006/07 budget setting
      process need to be compared with the actual agreement made, to update the
      projection of residual costs.

3     Three Year Projection

3.1   If no action was taken and expenditure was to continue at the current levels of
      activity, expenditure and income would be as follows with a council tax increase of
      3.7%. One percent Council Tax generates revenue of approximately £100,000:



                                            2
                                         2006/07      2007/08      2008/09      2009/10

                                           £            £             £            £

        Employee Costs                   16,882,870   17,703,856   18,240,172   18,712,277
        Premises Costs                    4,302,390    4,409,950    4,520,199    4,633,204
        Transport                         3,213,565    3,293,904    3,376,252    3,460,658
        Supplies and Services             5,170,750    5,300,019    5,432,519    5,568,332
        Third Party Payments              5,613,535    5,753,873    5,897,720    6,045,163
        Transfer Payments                25,817,175   26,693,121   27,468,263   28,266,660
        Capital Financing Costs           4,773,085    4,773,085    4,773,085    4,773,085
        Reversal of Capital Charges      -4,758,325   -4,758,325   -4,758,325   -4,758,325
        Total Expenditure                61,015,045   63,169,483   64,949,885   66,701,054

        Government Grants                25,274,575   26,032,812   26,813,796   27,618,210
        Other Grants and Contributions    1,689,175    1,739,850    1,792,046    1,845,807
        Sales                             1,381,810    1,416,355    1,451,764    1,488,058
        Fees & Charges - Activities       7,828,530    8,024,243    8,224,849    8,430,470
        Rent - other                      1,109,460    1,137,197    1,165,627    1,194,768
        Interest                          1,315,700    1,400,000    1,400,000    1,400,000
        Other Net Recharges               4,463,925    4,311,503    4,440,848    4,574,073

        Total Income                     43,063,175   44,061,960   45,288,930   46,551,386

        Net Expenditure                  17,951,870   19,107,523   19,660,955   20,149,668

        Add/(Deduct)
        Balances/Reserves
        Planning Delivery Grant             200,000      200,000     200,000      200,000

        Net Requirement                  17,751,870   18,907,523   19,460,955   19,949,668
        Financed by:
        Council Tax                      10,083,854   10,456,957   10,843,864   11,245,087
        NDR Pool                          6,427,315    6,577,331    6,741,764    6,910,308
        Revenue Support Grant             1,240,701    1,269,659    1,301,400    1,333,935

                                                  0            0            0            0
        Total Financing                  17,751,870   18,303,947   18,887,028   19,489,330
        Deficit / (Surplus)                       0      603,576      573,927      460,338


3.2   A breakdown of 2006-07 service budgets relating to this Committee is included in
      Appendix A. Please note that the budget book was prepared before the changes to
      the portfolios in May 2006.

4     The Gershon Efficiency Agenda

       There should be a clear link between the strategic budget review and the Gershon
       Annual Efficiency Statement, which was approved by Cabinet on 15 March 2006.
       The Gershon efficiency agenda requires efficiency gains of 2.5% per year up to
       2007/08, across a range of services. The following areas relating to the
       Environment Directorate have been identified for review in the Annual Efficiency
       Statement:

                                               3
              E-recruitment and e-auction for agency staff
              Corporate Printing, including reduced paper usage
              Joint procurement work with Congleton
              Joint Building Control with Congleton and Crewe and Nantwich
              E-billing
              Review of Markets
              Staff transfer from back office to front office

5   Capital Programme

    The three year Capital Programme is updated annually in line with the Council’s
    Capital Strategy. Development in updating the Capital Programme will commence
    in September 2006, with a full review of available capital resources. An update will
    be provided in the December report.

6   Way forward

    The Corporate Plan was formally adopted by the Council in 2004, covering the
    Council’s priorities for the next five years. The plan forms the basis for individual
    service delivery plans for 2007/08. The priorities identified in the Corporate Plan,
    Service Delivery Plans and new corporate tasks for 2007/08 will be the drivers for
    the Medium Term Financial Strategy and will inform the budget proposals that will
    be reported to Cabinet in October. A further report covering details of the proposed
    2007/08 budget within the remit of this Committee will be presented to members
    during December 2006.

    The timetable for the financial strategy review and budget setting process for
    2007/08 is proposed as follows: -

             Date                   Meeting                        Action
                                                             Financial Strategy
         2 August 2006              Cabinet               Assessing current position
                                                             Financial Strategy
         3 August 2006         Scrutiny Committee    Scrutiny of budget setting process

                                                       Budget Development Process
    7 – 29 August 2006         Policy Development      Checking budget process aligns
                                   Committees                  with priorities
                                                             Financial Strategy
      11 October 2006          Scrutiny Committee     Scrutiny of budget setting process

                                                              Financial Strategy
      25 October 2006               Cabinet             Setting the broad budget plan,
                                                       taking account of feedback from
                                                       Policy Development Committees
                                                            Financial Strategy
    22 November 2006                Cabinet               Service Budgets 2007/08

                                                            Financial Strategy
     9 – 24 December           Policy Development         Service Budgets 2007/08
           2006                    Committees



                                          4
                                                                Budget Update
       24 January 2007               Cabinet                 Feedback from Policy
                                                             Development process
                                                           Update of progress and any
                                                               emerging issues

                                                              Final Budget Setting
       14 February 2007              Cabinet               Recommendation of detailed
                                                                budget to Council
                                                             Final Budget Approval
       22 February 2007              Council               Including council tax setting



7    OTHER IMPLICATIONS

     Financial            -     As covered in the report
     Staffing             -     None
     Legal                -     None
     Assets               -     None
     Policy               -     None
     Equality             -     None
     Crime & Disorder     -     None
     Other                -     None


8    APPENDICES

     Appendix A – Extract from Budget Book 2006-07


     Cabinet Portfolio Holder   Cllr F Keegan         Tel Ext No: 4178

     Director                   Emma Alexander        Tel Ext No: 4800

     Corporate Manager          Lisa Quinn            Tel Ext No: 4801

     The Contact Officer for this report is Lisa Quinn ext no 4801.

    TRACKING/PROCESS:

Consultation         Ward Members                Partners
N/A                  N/A                         N/A
Panel                Overview & Scrutiny         Cabinet              Council
N/A                  Scrutiny Committee          2 August 2006        February 2007
                     3 August 2006
                     Policy Development
                     Committees 7 – 29
                     August 2006




                                             5
BACKGROUND PAPERS

The following list of documents were used to complete this report and are available
for public inspection for four years from the date of the meeting from the Contact
Officer named above

Budget Book 2006/07

Cabinet report – 2 August 2006




                                     6
                                                               Appendix A

       Summary
                                                 2005/2006    2006/2007


Page       Net Expenditure Under Main Headings    Original     Original
                            (1)                     (2)          (4)
                                                     £            £
Strategic Planning and Development Portfolio

 30    Technical - General                          215,245      165,640
 31    Engineers and Architects                     266,975      268,605
 32    Fleet Management                                   0            0
 33    Town Centre Services                          46,370       52,890
 34    Markets                                       44,975       33,940
 35    Public Conveniences                          357,335      415,090
 36    Car Parking                                 -702,880     -929,190
 37    Planning                                   1,899,450    1,950,925

       Total Net Requirements                     2,127,470    1,957,900


Public Health Portfolio
                                                     £            £
 39    Management and Administration                      0            0
 40    Waste Management                                   0            0
 41    Refuse Collection and Recycling            3,396,530    4,053,005
 42    Street Cleansing                           1,251,360    1,416,570
 43    Public Health                                186,605      172,670
 44    Food Safety                                  255,600      246,940
 45    Health and Safety                            127,970      131,065
 46    Pollution Control/Contaminated Land          288,265      363,340
 47    Pest Control                                  94,260      100,715
 48    Dog Warden                                    74,850       82,635

       Total Net Requirements                     5,675,440    6,566,940




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