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Cash-strapped council puts city projects on ice due to virus impact

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Cutting homelessness spending, delaying the completion of separated bikeways and shelving street upgrades are part of an Adelaide City Council plan to claw back over $24 million in the wake of a financial hit from COVID-19.

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One city councillor said the expected cuts would “radically change the face our city”, but Lord Mayor Sandy Verschoor has defended the “tough decisions”, saying most of the impacted projects would still go ahead in the next financial year.

According to its third quarter financial report, released yesterday, the city council has lost $9.4 million in revenue, including $5.5 million from scaled-back commercial operations and $4.2 million from reduced on-street car parking and expiations.

That projection only takes into account the start of the coronavirus pandemic, with the quarter four financial report likely to paint a more telling picture of how COVID-19 has hit council coffers from April through to June.

To soften the blow, the council’s executive has proposed a series of key infrastructure and capital works projects be “reprioritised” and “re-timed”, or have their “scope reduced” to recoup $24.7 million in savings.

Some of the proposed funding cuts include:

The council says big-ticket infrastructure projects including the redevelopment of the Central Market Arcade and the old Le Cornu site at 88 O’Connell Street will not be impacted.

According to the report, the council will also slash staffing costs by about $1 million in 2020-21 compared to this year’s spend.

Meanwhile, council’s operating deficit for the next financial year is expected to rise to $21 million, up from $19.3 million this year.

Projected debt has been wound back, with borrowings for the end of June estimated at $73.7 million – below the council’s prudential limit, which is currently set at about $90 million.

In good news for ratepayers, the council’s executive has proposed freezing the rate in the dollar for the next financial year.

Only those with new developments or other capital improvements undertaken this year where there is an increase to the rateable value of land would be forced to pay more.

“This will provide financial assistance and relief to ratepayers of approximately $2.1 million,” the report says.

A decision on whether to freeze rates still needs to pass the council chamber.

Deputy CEO Clare Mockler told this morning’s council audit committee meeting that the changes to the budget would ensure a sufficient cash flow through to the end of June.

“At the moment we’re forecasting remaining under prudential limits, but a lot will depend on how the next few weeks go,” she said.

“We just want to make sure that we’re keeping some flexibility with regards to that.”

But area councillor Robert Simms told InDaily the changes would “radically change the face of our city”.

“I think it’s critical that consensus is built across the council table for any proposed changes,” he said.

“It’s not good enough for Council to simply outsource all of the thinking around this to our administration.

“I think at this time the community want councillors to be closely engaged with what is being proposed to ensure that council’s response to coronavirus doesn’t leave anyone behind and puts the city in the strongest possible position to recover.”

Verschoor said most of the impacted projects would be “reprioritised” or “retimed” to be delivered in the first quarter of next financial year.

“The report that is coming in is the best advice such as our infrastructure and strategic project teams have put forward for consideration and they will be seeking council’s endorsement,” she said.

“Of course all of the projects and programs that we have in place are important but we’ve got to make some tough decisions.”

She said the council would consider the impacts of the coronavirus for the quarter four report “as they come”, with the situation changing “rapidly”.

“I’m looking forward to the discussion at council as to how we move forward.”

Councillors will discuss the report at Tuesday night’s committee meeting before deciding on whether to approve the budget measures on May 12.

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