The preparation and adoption of the annual Budget is one of the major responsibilities undertaken by local governments. Together, the operational plan and the budget identify the outputs and financial resources that will be directed towards achieving the outcome targets set in the corporate plan. It is essential for councils to ensure their practices are compliant with the legislative requirements of the Local Government Act 2009 and the Local Government (Finance Plans and Reporting) Regulation 2010.

There is a broad power to amend the budget after it has been adopted, should circumstances require.

The budget must be developed to be consistent with the corporate plan and the operational plan.

While neither the mayor nor councillors have the individual authority to act or make decisions on behalf of council, it is the responsibility of the mayor to present the annual budget to council for debate before adoption by the whole of council.

Legislation extracts

• Local Government Act 2009 - Annual budget (s104 Financial management, planning and accountability documents)

   

  104 Financial management, planning and accountability documents (1) The following documents of a local government must comply with the requirements prescribed under a regulation— (a) the financial management documents; (b) the planning and accountability documents. (2) The financial management documents include the following documents— (a) an annual budget; (b) a general purpose financial statement; (c) a long-term financial forecast; (d) an asset register that records— (i) capital expenditure; and (ii) depreciation charges; and (iii) revaluation increments and decrements; (e) a revenue statement.

• Local Government (Finance Plans and Reporting) Regulation 2010 - s98 Requirements for annual budget

   

  98 Requirements for annual budget (1) A local government must prepare a budget for its operating fund for each financial year. (2) The budget must be prepared on an accrual basis.

• Local Government (Finance Plans and Reporting) Regulation 2010 - s99 Budget contents

   

  99 Budget contents (1) The budget must include statements of the following for the financial year for which it is prepared and the next 2 financial years— (a) financial position; (b) cash flow; (c) income and expenditure; (d) changes in equity. (2) The statement of income and expenditure must state each of the following— (a) rates and utility charges excluding discounts and rebates; (b) contributions from developers; (c) fees and charges; (d) interest; (e) grants and subsidies; (f) depreciation; (g) finance costs; (h) net result; (i) the estimated costs of— (i) the local government’s significant business activities carried on using a full cost pricing basis; and (ii) the activities of the local government’s commercial business units; and (iii) the local government’s significant business activities. (3) The budget must include each of the following (the relevant measures of financial sustainability) for the financial year for which it is prepared and the next 9 financial years— (a) asset consumption ratio; (b) asset sustainability ratio; (c) interest coverage ratio; (d) net financial liabilities ratio; (e) operating surplus ratio; (f) working capital ratio. (4) The budget must be consistent with the following documents of the local government— (a) its long-term financial forecast; (b) its financial plan; (c) its 5-year corporate plan; (d) its annual operational plan; (e) its long-term community plan. (5) In this section— commercial business unit see section 25(2) of the Business Activities Regulation.

• Local Government (Finance Plans and Reporting) Regulation 2010 - s100 Adoption and amendment of the budget

   

  100 Adoption and amendment of the budget (1) A local government must adopt its budget for a financial year— (a) after 31 May in the year before the financial year; and (b) before— (i) 1 September in the financial year; or (ii) a later day decided by the Minister. (2) The annual budget must comply with section 99 when it is adopted. (3) If the budget does not comply with section 99 when it is adopted, the adoption of the budget is void. (4) The local government may, by resolution, amend the budget for a financial year at any time before the end of the financial year. (5) However, the budget must continue to comply with section 99 when the amendment is adopted. (6) If the budget is amended and does not comply with section 99, the amendment of the budget is void.