MAIDSTONE BOROUGH COUNCIL
REPORT OF POLICY & RESOURCES COMMITTEE HELD ON 13th FEBRUARY 2019
MEDIUM TERM FINANCIAL STRATEGY AND BUDGET PROPOSALS 2019/20
Issue for Decision
To consider the proposed Revenue and Capital Estimates for 2019/20, including service savings and growth, in accordance with the agreed budget strategy and in the context of the Medium Term Financial Strategy and the Strategic Revenue Projection.
To calculate and approve the Council Tax requirement for 2019/20.
To adopt the Treasury Management, Investment and Capital Strategies for 2019/20.
Recommendations Made
1.
That the revised
Revenue Estimates for 2018/19 be agreed as set out in Appendix A.
2.
That the minimum
level of General Fund Balances be set at £2 million for 2019/20.
3. That the Strategic Revenue Projection as set out in Appendix A be endorsed as the basis for future financial planning.
4.
That the
proposed Council Tax of £260.46 at Band D for 2019/20 be agreed.
5.
That the Revenue
Estimates for 2019/20 set out in Appendix A be agreed.
6.
That the
Statement of Earmarked Reserves and General Fund Balances as set out in
Appendix A be agreed.
7.
That the funding
of the Capital Programme as set out in Appendix A be agreed.
8.
That the Capital
Programme as set out in Appendix A be agreed.
9. That the Medium Term Financial Strategy as set out in Appendix A be agreed.
10.
That it be noted
that the Council’s Council Tax base for the year 2019/20 has been calculated as
62,033.4 in accordance with Regulation 3 of the Local Authorities (Calculation
of Council Tax Base) regulations 1992.
11.
That it be noted
that in accordance with Government guidance the yield from business rates has
been calculated as £55,900,756.
12.
That it be noted
that the individual parish area tax bases set out in Appendix B are calculated
in accordance with regulation 6 of the Regulations and are the amounts of the
Council Tax Base for the year for dwellings in those parts of the Council’s
area to which a special item relates.
13.
That the Council
Tax requirement for the Council’s own purposes for 2019/20 (excluding Parish
precepts) is £16,157,219.
14.
That the
following amounts now be calculated by the Council for the year 2019/20 in
accordance with Section 32-36 of the Local Government Finance Act 1992 as
amended by the Localism Act 2011:-
|
(a) |
£97,129,304 |
being the aggregate of the amounts which the Council estimates for the items set out in Section 32(2) of the Act taking into account all precepts issued to it by Parish Councils. |
|
(b) |
£79,036,010 |
being the aggregate of the amounts which the Council estimates for the items set out in Section 32(3) of the Act. |
|
(c) |
£18,093,294 |
being the amount by which the aggregate at 15(a) above exceeds the aggregate at 15(b) above, calculated by the Council in accordance with Section 32(4) of the Act as its Council Tax requirement for the year. (Item R in the formula in Section 32(4) of the Act).
|
|
(d) |
£291.67 |
being the amount at 15(c) above (Item R), all divided by the figure stated at 10 above (Item T in the formula in section 33(1) of the Act), calculated by the Council, in accordance with Section 33 of the Act, as the basic amount of its Council Tax for the year (including parish precepts). |
|
(e) |
£1,936,075 |
being the aggregate amount of all special items (Parish precepts) referred to in Section 34(1) of the Act (as per the attached Appendix B). |
|
(f) |
£260.46 |
being the amount at 15(d) above less the result given by dividing the amount at 15(e) above by the tax base given in 10 above, calculated by the Council, in accordance with Section 34(2) of the Act, as the basic amount of its Council Tax for the year for dwellings in those parts of its area to which no Parish precept relates. |
15. That it be noted that for the year 2019/20 Kent County Council, the Kent Police & Crime Commissioner and the Kent & Medway Fire & Rescue Authority have stated the following amounts in precepts issued to the Council, in accordance with Section 40 of the Local Government Finance Act 1992, for each of the categories of dwellings shown below:-
|
Valuation Bands
|
KCC PRECEPT £ |
KCC ADULT SOCIAL CARE £ |
KPCC £ |
KMFRA £ |
|
A |
804.48 |
61.80 |
128.77 |
51.84 |
|
B |
938.56 |
72.10 |
150.23 |
60.48 |
|
C |
1072.64 |
82.40 |
171.69 |
69.12 |
|
D |
1,206.72 |
92.70 |
193.15 |
77.76 |
|
E |
1,474.88 |
113.30 |
236.07 |
95.04 |
|
F |
1,743.04 |
133.90 |
278.99 |
112.32 |
|
G |
2,011.20 |
154.50 |
321.92 |
129.60 |
|
H |
2,413.44 |
185.40 |
386.30 |
155.52 |
16. That, having calculated the aggregate in each case of the amounts at 15 (d), and 16 above, the Council, in accordance with Section 30 (2) of the Local Government Finance Act 1992, hereby sets out in Appendix C, the amounts of Council Tax for the year 2019/20 for each of the categories of dwellings shown.
Reasons for Recommendation
At its meeting on 12th December 2018, Council agreed a Medium Term Financial
Strategy (MTFS) for the next five years. Whilst the Council is in a relatively
strong financial position currently, there is a high degree of uncertainty about
the medium term position. Given the uncertainty about the future, various
potential scenarios were modelled in the MTFS, representing (a) favourable, (b)
neutral and (c) adverse sets of circumstances. Projections were prepared for
each of the scenarios modelled and the MTFS stated that budget proposals would be sought to address all the potential scenarios. The ‘neutral’ budget proposals have been considered by Service Committees and the Policy and Resources Committee for their respective areas. Policy and Resources Committee also considered the capital programme at its meeting on 23rd January. Once each Committee had considered the budget proposals, the Policy and Resources Committee considered the Budget as a whole at its meeting on 13th February 2019 and recommended it to Council for adoption.
The recommendations contained in this report allow the Council to set the
budget, including the Council Tax rate, for 2019/20 according to the specific
provisions contained within the Local Government Finance Act 1992.
Alternatives Considered and Why Not Recommended
The Council could choose not to pass a budget. However, this would be contrary to the Local Government Act 2003.
The Council could choose to amend the budget. Any amendments would be
additional to the recommendations already made by the Service Committees, as well as the recommendation made by the Policy and Resources Committee. It is important that the Council has a balanced budget after taking account of any amendments. The Director of Finance and Business Improvement (section 151 Officer) must provide confirmation to Council that “the budget calculations are based upon robust estimates and that the level of reserves is sufficient for the purposes of the budget exercise”. Care must be taken in amending the budget so that the Director of Finance and Business Improvement is able to make the necessary confirmation.
Guidance from the Monitoring Officer
The Local Government Act 2003 (as amended) requires Council to adopt the
annual budget which is recommended by the Policy and Resources Committee.
The Council has a statutory obligation to set a balanced budget differentiated by services, which is sufficient to meet estimated revenue expenditure, levies,
contingencies, any deficits estimated to be brought forward from previous years, and any amounts required to be transferred between funds required under the Local Government Finance Act 1992 and related legislation.
In compliance with the principles of administrative law, members are required to take into account relevant considerations and disregard irrelevant ones. Any
decision made must be one that only a reasonable authority, properly directing
itself could have reached.
Members must act prudently taking into account the professional advice of
officers, in particular the statutory obligations placed upon the Director of
Finance and Business Improvement, the S151 officer. Members can make
alternative proposals in achieving a balanced budget but are exposed to a
personal risk if they disregard clearly expressed professional advice.
Members are required to have regard to the guidance of the S151 officer on the
budget estimates and adequacy of reserves. The wider duties placed on the
Council relating to its financial affairs must be taken into account. This includes
the distinction between revenue and capital expenditure specified within the
Local Government and Housing Act 1989.
Prudential borrowing limits must be set by the Council having regard to the
Chartered Institute of Public Finance and Accountancy (CIPFA) Prudential Code.
The Code sets a framework for self-regulation of capital spending, enabling
Councils to invest in capital projects without any limit, so long as they are
affordable, prudent and sustainable taking into account prudential indicators
which must be monitored.
It is a criminal offence for a member with arrears of Council Tax which have
been outstanding for two months or more to attend any meeting of the Council
or one of its committees at which a decision affecting the budget is to be made – the Local Government Finance Act 1992, section 106. To avoid criminal liability, relevant members must make a declaration at the outset of the meeting that he or she is in arrears and will not be voting on the decision for that reason. The member concerned must then abstain from voting.
Having set a budget for the new municipal year, the Council is under a duty to
monitor that budget during the year and to take remedial action if at any time it appears likely that expenditure will exceed available resources.
Background Documents
Appendix A: Budget Book
Appendix B: Schedule of Council Tax Base and Additional Council Tax in Parts of
the Area with Parish Precepts
Appendix C: Schedule of Council Tax levels for all Bands and all Parts of the area