Local authorities spend a record $2.3b in Q2

BUSINESSDESK: New Zealand's 11 regional councils and 68 territorial authorities spent $145 million more than they earned in the second quarter, continuing an almost unbroken run of deficits from 2007, government figures show.

Total operating income, which includes rates, investment returns, grants, subsidies and donations, regulatory income such as building consent and dog registration fees – and operating income such as admissions and service charges – rose 7% to $2.16 billion in the second quarter from the first quarter.

Operating expenditure rose about 12% to a record $2.3 billion, according to Statistics New Zealand. The figures are seasonally adjusted.

Local authorities have recorded deficits in 19 of the past 22 quarters. The biggest source of income is rates, which fell 3.1% to $1.1 billion in the second quarter from the first three months of the year and were 3% higher than in the second quarter of 2011.

Investment income jumped about 98% to $177 million in the latest quarter and is typically lumpy because of the timing of dividends for council-owned businesses such as airports.

Income from grants, subsidies and donations rose about 29% to $368 million, while regulatory income and petrol tax rose 6.7% to $139.4 million. Sales and other operating income edged up 0.2% to $343.3 million.

Purchases and operating expenditure, which includes rent, insurance, fuel, postage, repairs and maintenance, rose 21% to $1.29 billion in the second quarter from the first and was about 20% up on the second quarter last year.

Employee costs rose 3% to $446 million and climbed 6.4% from a year earlier. Interest costs rose 7.5% to $151.4 million, while depreciation and amortisation fell 1% to $407.5 million.

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