Councils are continuing their fight against the freeze on indexation of federal financial assistance grants.
The federal government announced a freeze on indexation in the federal budget in May that will mean $139 million is ripped from council budgets across Victoria in the next three years.
Municipal Association of Victoria president Bill McArthur said councils would start to feel the real impact of the cuts when the first of the quarterly payments were due to be paid. That was last week.
“We’ve known since May that these cuts were coming, and some councils have had to take extreme measures, like scaling back road maintenance and other council services, to make up for the shortfall,” Cr McArthur said.
“These cuts will force councils to reassess their budget options. Some councils may increase rates. This funding loss leaves communities vulnerable to scaled-back services and potentially deteriorating infrastructure.”
Cr McArthur said the municipal association had been working hard with councils to voice opposition to the freeze, and to set up a financial assistance grants taskforce made up of councillors and officers from rural and metropolitan councils.
Melton council has a shortfall of $526,000 in its 2014-15 budget.
According to Melton chief executive Kelvin Tori, the shortfall is due to a combination of the effect of a reduced allocation to the state of Victoria and removal of indexation.
“The indexation element is about $340,000,” he said. “It’s anticipated that with a 2.5 per cent consumer price index over the next two years, council over three years will lose a total of approximately $1 million.”
Mr Tori said the budget shortfall hadn’t directly affected particular programs or projects, but it would be taken into account in the mid-year review of the budget.
Last month, Moorabool council slammed the federal government’s decision.
Mayor Paul Tatchell said the grants were vital to council delivering services and keeping assets up to date.
“The [grants] are used to maintain infrastructure assets, including local roads, bridges, parks, swimming pools, libraries and community halls, as well as services to the young, elderly and community groups of all kinds,” Cr Tatchell said.
“The funds form a critical part of council’s revenue base as general-purpose funding for a variety of activities and services that council provides. Freezing them for three years will put enormous pressure on our budgets.”
The council said it would lose $5.3 million over 10 years because of the changes.
