Apologies from
Cr AM Filipaina and Cr LA Cooper have been received.
2 Declaration of Interest
Members are
reminded of the need to be vigilant to stand aside from decision making when a
conflict arises between their role as a member and any private or other
external interest they might have.
3 Confirmation of Minutes
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That the Budget Committee:
a)
confirm the ordinary minutes of its meeting,
held on Monday, 26 May 2014, as a true and correct
record.
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4 Petitions
At the close of the
agenda no requests to present petitions had been received.
5 Public Input
Standing Order
3.21 provides for Public Input. Applications to speak must be made to the
Committee Secretary, in writing, no later than two (2) working days
prior to the meeting and must include the subject matter. The meeting
Chairperson has the discretion to decline any application that does not meet
the requirements of Standing Orders. A maximum of thirty (30) minutes
is allocated to the period for public input with five (5) minutes
speaking time for each speaker.
At the close of
the agenda no requests for public input had been received.
6 Local Board Input
Standing Order
3.22 provides for Local Board Input. The Chairperson (or nominee of that
Chairperson) is entitled to speak for up to five (5) minutes during this
time. The Chairperson of the Local Board (or nominee of that Chairperson)
shall wherever practical, give two (2) days notice of their wish to
speak. The meeting Chairperson has the discretion to decline any application
that does not meet the requirements of Standing Orders.
This right is
in addition to the right under Standing Order 3.9.14 to speak to matters on the
agenda.
At the close of
the agenda no requests for local board input had been received.
7 Extraordinary Business
Section 46A(7)
of the Local Government Official Information and Meetings Act 1987 (as amended)
states:
“An item that is
not on the agenda for a meeting may be dealt with at that meeting if-
(a) The local authority by resolution so decides; and
(b) The presiding member explains at the meeting, at a time
when it is open to the public,-
(i) The
reason why the item is not on the agenda; and
(ii) The reason why the discussion of the item cannot be
delayed until a subsequent meeting.”
Section 46A(7A)
of the Local Government Official Information and Meetings Act 1987 (as amended)
states:
“Where an item
is not on the agenda for a meeting,-
(a) That item may be discussed at that meeting if-
(i) That item is a minor matter relating to the general
business of the local authority; and
(ii) the presiding member explains at the beginning of the
meeting, at a time when it is open to the public, that the item will be
discussed at the meeting; but
(b) no resolution, decision or recommendation may be made in
respect of that item except to refer that item to a subsequent meeting of the
local authority for further discussion.”
8 Notices of Motion
At the close of
the agenda no requests for notices of motion had been received.
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Budget
Committee
14 August 2014
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Adoption of
amendment to the Local Boards Funding Policy
File No.: CP2014/17246
Purpose
1. To recommend to the Governing
Body that it adopt the amendment to the Local boards funding policy.
Executive
summary
2. The Local boards funding policy
(LBFP) sets out how local activities are to be funded (the split between rates
and fees and charges) and who should pay where rates are used. Local boards and
the Governing Body each have different roles in decision making for local
activities. The review of the LBFP has sought better alignment between funding
decisions and decisions on levels of service.
3. On 26
May, the Budget Committee adopted a statement of proposal to amend the LBFP.
Key elements of the proposal were:
· separating local activities into two
parts:
o local asset based services (eg: swimming
pools and parks) where the Governing Body sets the base service level
o locally driven initiatives (eg:
events and community programmes) where local boards have full decision making
control
· continuing to fund the local asset based
services from general rates for assets located in each local board area
· continuing to fund locally driven
initiatives from general rates and allocating budget to each local board using
a formula (90 percent population, 5 percent deprivation and 5 percent
geography)
· funding agreements negotiated annually
for Great Barrier Island and Waiheke local boards
· transition:
o for boards below their share under
the formula the budget for locally driven initiatives will be increased in
equal steps over three years to meet the formula
o for
boards above their share the budget for locally driven initiatives will be held
at the current absolute level until formula allocation catches up.
4. Only 14 submissions were
received during the consultation period which ran from 9 June to 9 July. Of
these, two submitters spoke in support of their submission at the public
hearing on 30 July. On the whole, submitters were supportive of the proposed
amendments and no new issues were raised. The hearings panel did not recommend
any changes to the proposal.
5. Of the 14 submitters, 10 agreed
with the proposal to fund asset based services from general rates.
6. There was more mixed support for
the proposal to fund locally driven initiatives from general rate. A majority
of seven submitters agreed with the proposal while five disagreed.
7. Similarly, a majority of seven
submitters agreed population should have the highest weighting in an allocation
formula. While there was more mixed support for the weighting of deprivation
and geography (land area), most agreed that they should not be given a high
weighting. Only two submitters indicated deprivation should have a high
weighting, and three indicated geography should have a high weighting.
8. The majority of eight submitters
support the proposal for Great Barrier Island Local Board and Waiheke Local
Board to have separate funding that is agreed with the Governing Body each
year. Four submitters disagreed.
9. Staff recommend the adoption of
the proposed amendment to the LBFP (appendix A).
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Recommendation/s
That the Budget Committee:
a) recommend to the Governing Body
that it adopt the amendment to the Local Boards Funding Policy.
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Comments
Background
10. The Local boards funding policy
(LBFP) sets out how local activities are to be funded (the split between rates
and fees and charges) and who should pay where rates are used. Decisions on
service levels and how much funding is available are made when budgets are
prepared each year.
11. The
review of the LBFP has sought better alignment between funding decisions and
decisions on levels of service and equity in funding for local boards. This has
resulted in a proposal with separate funding mechanisms for:
· local asset based services such as
those associated with parks, swimming pools and community facilities where the
Governing Body makes decisions on the location, nature and number of local
assets and matches this with funding (general rates)
· locally
driven initiatives, where local boards undertake activities for the benefit of
their local communities, and control decisions on who gets funding and the
services and service levels to be delivered (general rates allocated by
formula).
12. This report summarises feedback
received from consultation on the mechanisms proposed to fund these two groups
of local activities.
13. Under the proposed policy, local
boards can continue to advocate to the Governing Body for local targeted rates
as a source of revenue to fund local activities. The Governing Body makes the
final decision as legislation requires that only the Governing Body can set a
rate.
14. Local boards have been allocated
decision making to set local fees and charges. Under the proposal, local boards
retain the benefit/bear the cost of any change in fees as a result of their
decision making.
15. Local boards have also been
allocated decision making for some capital expenditure. Under the proposal,
local boards will be allocated budget for capital expenditure if local boards
can meet the consequential operating costs from their locally driven
initiatives budget.
Funding local asset based
services
16. The amendment proposed continuing
to fund, from the general rate, the local asset based services, such as
swimming pools and parks, that are located in each local board area. Local
boards have an advocacy role in decisions on local asset based services and
make decisions within parameters set by the Governing Body.
Submissions
17. The majority of submitters (10)
agreed with the proposal to fund from general rates the local asset based
services that are located in each local board area.
Conclusion
18. The key issue for funding local
asset based services is that alternative funding options would result in budget
or equity issues for some local boards. No new issues were raised from the
consultation.
19. The majority of local boards
agree that they should continue to be funded from general rates for the local
asset based services that are located in their local board area.
Funding locally driven
initiatives from general rates
20. The amendment proposed continuing
to fund locally driven initiatives, such as events and community programmes,
from general rates. These are services where local boards have full decision
making control. The proposal also contained alternate options that were
considered and rejected. These were using local targeted rates or a combination
of general rates and local targeted rates.
Submissions
21. Of the 12 submitters who
responded to this part of the proposal, seven submitters agreed that locally
driven initiatives should be funded from general rates while five disagreed.
While this is mixed support, the majority support the proposal.
22. No other funding mechanisms were
suggested by submitters.
\
Conclusion
23. The focus of the proposal was how
to fund locally driven initiatives. The key issue when determining the funding
method is whether the Governing Body or local boards should make decisions on
the level expenditure and rates. The status quo is not fair in any dimension
(except in so far as no change to budgets is required) in terms of how funding
is distributed to local boards as there is no connection to any measure of
equity, e.g. population, and the funding provided.
24. Under the general rates allocation
option the Governing Body makes decisions on the level of expenditure and how
the expenditure is funded. Local boards can only advocate for increases in the
budget and changes to the formula used to allocate budget to the local boards.
Under the local rate option each local board effectively makes decisions on the
level of expenditure it needs.
25. The local rate provides the best
alignment between expenditure and funding decisions. The general rates
allocation option is best for affordability as it doesn’t change the incidence
of rates.
26. The majority of local boards
agreed that locally driven initiatives should be funded from general rates.
Locally driven initiative
budget allocation options
27. The amendment proposed allocating
locally driven initiatives budget to each local board using a formula that uses
each local board’s share of population (90 percent), deprivation (5 percent)
and land area (5 percent).
Submissions
28. Of the 12 submitters who
responded to this part of the proposal, population was relatively polarising
with seven submitters indicating it should have a high weighting, while the
other five indicated it should have a low weighting. As such, the majority of
submitters agreed population should have the highest weighting.
29. While there was mixed support for
the weightings used for deprivation and geography (land area), most agreed that
they should not be given a high weighting. Only two submitters indicated
deprivation should have a high weighting, and three submitters indicated
geography should have a high weighting.
30. No additional factors for use in
an allocation formula were suggested by submitters.
Conclusion
31. Population size has a strong
relationship to cost of services and should be a key consideration in an allocation
formula. However, there is no objective evidence to inform the relationship
between budget requirements and attributes like deprivation and geography.
Defining the factors to be used in a funding formula is therefore subjective.
Using geography in the allocation formula as this has a high distortion impact
on the end allocation.
32. Local boards agreed that
population should be the primary factor in any allocation formula. However
there were mixed views on what and how any others factors should be included.
Separate funding
agreements for Great Barrier Island and Waiheke local boards
33. The amendment proposed funding
agreements to be negotiated annually for Great Barrier Island and Waiheke local
boards.
Submissions
34. Of the 12 submitters who
responded to this part of the proposal, eight submitters agreed that there
should be separate funding agreements for Great Barrier Island and Waiheke
local boards, while four disagreed.
Conclusion
35. Great Barrier Island local
activities should be funded from general rates based on the level agreed with
the Governing Body. Funding locally driven initiatives for Great Barrier Island
from local rates would not be affordable. Waiheke Island is also an outlier in
terms of impact under the policy options, although not to the same degree.
36. The majority of local boards
recognised that population based formulas are unlikely to work for Great
Barrier Island and Waiheke local baords.
Transition
37. The amendment proposed to
transition budget allocation for locally driven initiatives over time. The
proposed transition process is split into two stages, the first stage covers
the three years up to 2017/2018 and is outlined in the table below.
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Local boards
funded less than their allocation under the formula
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Local boards
funded above their allocation under the formula
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Locally driven initiatives budget will be increased in
equal steps so that the local board is funded to the level of the allocation
formula after 3 years
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Locally driven initiatives budget will be held at its
current absolute level (no increases for inflation)
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38. The second stage is outlined in
the table below and covers from 2018/2019 onwards.
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Local boards
funded to the level of the allocation formula
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Local boards
funded above their allocation under the formula
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Increases in the total budget for locally driven
initiatives budget will be applied as per the formula
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Locally driven initiatives budget will be held at its
current absolute level (no increases for inflation) until it is exceeded by
the allocation under the formula
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39. Only one submitter commented on
the transition process, suggesting that the first stage happen over two years
instead of three.
Consideration
Local
board views and implications
40. A
strategic issue for local boards is the share of budget allocated for local
activities. Local boards note that the locally driven initiatives budget
accounts for one per cent of total operating costs, and asset based services
account for ten per cent of council’s total operating costs. Local boards have
recommended that further work be undertaken to:
· determine whether 11 per cent of
Auckland Council’s budget is an appropriate share for local activities
· determine the appropriate amount of
budget for local boards to successfully deliver upon their role noting that the
current allocation is based on a cut of legacy council budgets and was
determined at a time when little was understood about the local board role
· determine whether more activities
and the corresponding funding should sit in the locally driven initiatives
category
· identify programme budgets to move
to local board budgets as current local budgets are dominated by overhead costs
with little funding for programmes
· investigate programme budgets held
by the Community Development, Arts and Culture department, in particular, given
the key role for local boards in community development
· investigate
and improve the methodology of allocating overheads across the local boards as
different approaches are used across activities.
41. The Governing
Body will consider these issues in development of the long-term plan. The
long-term plan will include setting expenditure and service levels for local
activities and it will also include a review of the:
· allocation of activities between
regional and local
· allocation of decision making for
local activities
· method
for allocating overheads, including those for local activities.
Maori
impact statement
42. Maori could be impacted by the
proposed amendment to the Local Boards Funding Policy as the level of locally
driven initiative budget available to each local board changes. Maori may
benefit from a funding formula that has greater emphasis on deprivation, based
on 2013 census data, as this will provide more funding to local boards with
higher Maori populations. How Maori are impacted would depend on how the local
boards choose to use their locally driven initiatives budget.
Implementation
43. There are no implementation
issues associated with the recommendations in this report.
Attachments
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No.
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Title
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Page
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aView
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Amendment to the Local Boards Funding Policy
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13
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Signatories
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Authors
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Aaron Matich - Principal Advisor
Andrew Duncan - Manager Financial Policy
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Authorisers
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Matthew Walker - Manager Financial Plan Policy and
Budgeting
Andrew McKenzie - Chief Finance Officer
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