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Budget Deficit Claim Rubbished People in Exeter can rest assured that the city does not have a massive budget deficit. Claims that the council has a deficit of £11million have been roundly refuted. Exeter City Council's Chief Executive, Philip Bostock, said: "The council has always had an ambitious and substantial capital investment programme, including the rebuilding of Exeter's museum, significant city centre enhancements and major investment in affordable housing. To fund completion of this year's committed capital investment programme, we would need to borrow up to £11 million, and meet the cost of the borrowing from the revenue budget. " "Over the next five years aggregate borrowing could reach around £30 million. This is perfectly normal and has to be capable of being repaid from each year's balanced revenue budget - the principle is just like paying off a mortgage on a house. It is not a deficit on our budget. Just for comparison, Ipswich Borough Council has long-term borrowing of £41.7 million, Gloucester City Council £29 million, and Devon County Council £613 million." In common with councils all over the country, Exeter is facing a greater challenge in preparing budgets in the current economic climate. In a budget report to the city's Executive and to the City Council in February, councillors were told that Exeter City Council is facing a more challenging annual revenue budget situation for the next three years than it has had to face for some time. In part, this is due to a very low government funding settlement for 2008 to 2011 together with the loss of other government grants and some new external spending pressures. In part, it is also due to the fact that Exeter is moving from being one of a small number of councils who have enjoyed debt-free status to being like most other councils who have to borrow to fund their capital expenditure. Philip Bostock explained how the council is preparing for the budget challenges. "What we have to do is to take account of all these factors and set, each year, a balanced revenue budget, one where all our day-to-day net expenditure is covered by our annual income, which comes from a variety of sources including government grant, council tax, interest on balances, and other income such as car park charges, commercial rents and a whole range of other fees and charges. " "The process we are in at the moment is considering what adjustments may have to be made to reach a balanced budget situation and at the moment it looks as if something up to £1million could have to be saved. But there are many changing variables in this equation and no decisions have yet been made. Indeed, final decisions do not have to be made by elected members until February next year, when the 2009/10 budget will be set." |
