Many Victorian councils are expecting to report operating deficits in 2020-21, some for the first time, because of Covid-19 impacts.
The revelations come from a survey of Victorian councils conducted by Local Government Finance Professionals and published as a report by the Local Government Information Unit (LGIU) Australia.
The FinPro survey found that councils have budgeted to either use cash reserves or take out borrowings to maintain liquidity in the face of revenue losses caused by services and facilities closures as well as maintaining workforces without access to government support (such as the Commonwealth’s JobKeeper package).
“Add to this the cost of council support and stimulus packages, and the financial outlook for some local governments (especially small shires) is bleak,” the report says.
The survey of FinPro’s 79 member councils focused on how they were dealing with the impacts of service closures and consequent workforce stand-downs/redeployments and how they were financially supporting their community and local businesses.
“Councils are now faced with a new post-Covid-19 normal,” the report concluded, “one which previous history and experience offers little guidance on how to adapt in order to meet the new needs of their communities.
“A great deal of planning will be required by the sector to respond to the aftermath of the pandemic.”