City of Newcastle expects to take an $8.5 million hit this financial year from stay-at-home orders being imposed on the region and state.
Following a quarterly budget review, the council has revealed it will likely suffer an $8.5 million reduction in income in 2021/22 due to revenues lost as a result of COVID-19 restrictions.
- $2.6 million reduction in income caused by waste trucks from Sydney being locked out of the Summerhill Waste Management Centre;
- $2 million loss from the closure of Civic Theatre and other city facilities;
- $1 million reduction in parking meter revenue;
- $1.3 million reduction in parking tickets;
- $600,000 reduction from bookings to the Stockton Holiday Park.
"We are fortunate that, despite the impacts of COVID, we have been able to manage these financial setbacks without them threatening the sustainability of the organisation or requiring us to consider other measures such as rate increases or reduced [staff] levels," council CEO Jeremy Bath said
Despite the predicted financial impact, the council plans to dip into its cash reserves to increase infrastructure spending by $14 million to more than $104.7 million this financial year.
Councillors recently voted to investigate increasing the works program as a way of boosting the local economy as it emerged from lockdown and they will be asked to formally endorse the proposed increased spend at next week's ordinary meeting.
The combination of the financial impact of the lockdown combined with the economic stimulus package is forecast to reduce the council's predicted operating result, before capital grants and contributions, to a deficit of $11.6 million.
The initial budget adopted in May had forecast a $1.2 million operating surplus.
Lord mayor Nuatali Nelmes said the council had made a conscious decision to provide financial support to vulnerable groups and business while increasing investment in projects to support jobs.
"Council unanimously voted in August to move forward with additional COVID support measures, including rapid response grants to support our vulnerable community members, business training and mentoring programs and economic development and community grants," she said.
"These crucial decisions were only possible due to our strong financial sustainability, a legacy of delivering six consecutive operating surpluses prior to the pandemic."
The council posted a $3.6 million deficit in 2019/20 after suffering what it said was a $10 million hit because of the initial COVID-19 outbreak. A much larger deficit is expected for 2020/21.