Lake Macquarie City Council recorded an $11.5 million deficit and is racking up more than $30 million in red ink over a three-year stretch from 2019 to 2021.
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The council's latest financial statement, to be tabled at Monday's ordinary general meeting, shows the council followed up a $9.9 million deficit last year with a larger negative result in 2019-20.
Its 2020-21 budget estimates another deficit of $11.5 million in 2020-21, partly due to a coronavirus-related fall in revenue, a $6.8 million shortfall in 2021-22 and virtually balanced budgets in the following two years.
Liberal councillor Jason Pauling said ratepayers could fairly question why the council was returning deficits after increasing rates by 57 per cent over the seven years to 2018-19.
Cr Pauling said the experience of Central Coast Council, which is facing suspension after going broke, had put the spotlight on councils' money management.
"Deficits are always a concern, and that's been brought into light really well with Central Coast Council recently," he said.
The council's rent revenue fell $5 million in 2019-20, but its income from user charges and fees dropped only $1 million.
In contrast, City of Newcastle, which operates COVID-affected revenue raisers such as Newcastle Airport, Civic Theatre and parking stations, recorded a $3.6 million deficit after its fees and charges revenue plunged $16 million and its rent income dropped almost $3 million.
Cr Pauling said COVID-19 had played a part in the council's financial performance this year, but he said "reckless spending" could "end in disaster", as it had on the Central Coast, which is expecting a monster $89 million deficit this year.
"We are nowhere near that level. I want to make that really clear," he said.
"To the best of my knowledge we are stable. We were in a strong financial position.
"We have an increasingly social-conscience-focused council, but that comes at a risk. I'm not hugely concerned, but I'm not unconcerned."
Cr Pauling said the council had forecast five years ago that it would be returning healthy surpluses by now.
"I understand short-term deficits are not the end of the world, but you need a way out. My concern is previously predicted surpluses haven't been realised."
The council's chief financial officer, Dwight Graham, said he had not been "alarmed" by any of the council's spending decisions.
He said this year's bottom line had been affected by a $3.7 million asset write-off, a $1.7 million write-down of property values due to COVID-19 affecting rental income, fees and charges dropping $2 million under budget due to the pandemic, and investment income falling $1.4 million under budget.
He said last year's result had been due largely to an $8.6 million asset write-off.
"We're in a sound financial position and we continue to closely watch and monitor the situation," Mr Graham said.
The council has increased its borrowings from $79 million in July 2018 to $178 million in July this year.
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