The Parish is proposing an estimate net expenditure of £863,735 for the current financial year 2022/23. This figure can be found 3 lines down on Page 19 of the Parish Accounts 2022 and Estimates 2022/23 document circulated for Tuesday’s Rates Assembly, replicated in Figure 1 below:
Figure 1 - Funding Scenarios for Estimated Expenditure 2022/23
It’s difficult to argue whether this figure is reasonable or not as, despite recommendations, the Constable has not provided any narrative or explanations. I understand that he will provide an oral explanation at the Parish Assembly on Tuesday 20th December. The breakdown can be found on Pages 17 and 18 of the Parish Accounts 2022 and Estimates 2022/23 document, replicated in Figure 2 below. But what can be said is that we are already in the 8th month of this financial year so the Constable should have a very clear view of what further expenditure is required between now and the end of April. Every organisation should monitor its actual spend against budget regularly so, with two thirds of the year already gone, the full year expenditure should be pretty straight forward to forecast.
Figure 2- Estimated Expenditure 2022/23
So how can the Parish meet this cost? Figure 1 provides 4 different rate levels as an example of how much income is raised if these rate levels are applied. The rate levels are 0.99p (the current rate applied in Grouville) and 3 further rates – 1.11p, 1.12p and 1.13p. These represent a 12%, 13% and 14% increase on the current rate.
The next sub-total on Figure 1 shows whether the rate income raised at each level falls short, or more than covers, the estimate of expenditure. If the Rates Assembly approved no increase to the current rate of 0.99p, an estimated shortfall of £87,371 will arise. If any of the other 3 rates are approved, a surplus will exist (ranging from £6,734 to £22,418). You may think this would mean the Parish would be in debt if it raised a rate below 1.11p but that is not the case because it has a ‘Reserve’ fund from which it can fund any deficits. This fund,the General Account, has a balance of £287,002 in it (see ‘Balance brought forward’ towards the bottom of figure 1 above) so, if a nil rate increase was approved, this ‘Reserve’ fund would be called upon to the value of about £87,000, still leaving £199,631 as a balance. If any of the other rate options put forward is approved, the ‘Reserve’ fund will be increased. The Parish may argue it has a responsibility to raise a rate to cover its expenditure – this is not the case if it has funds set aside, like this ‘Reserve’ fund, to call upon.
One key point: the Parish underspent its budget in 2021/22 to the value of £180,000. It estimated expenditure of £906,809 but actually only spent £719,555 (see Figure 3 below). This has meant that ‘Reserve’ the Parish maintains has an additional £180,000 in it that wasn’t expected when the Rates Assembly set the rate of 0.99p in 2021. In fact, we didn’t need to pay the 15% rate increase last year. So it would seem more than reasonable, at a time of a cost of living crisis, to use the General Reserve to maintain the current rate of 0.99p per quarter.
Figure 3 - General Account at April 2022
Caroline Anderson is a retired CIPFA (Public Sector) Accountant with 40 years experience working in two London boroughs before moving to Jersey in 1986 (and living in Grouville since 1988) to work for the States of Jersey.