CITY of Kalamunda is set to advertise the differential rates for 2025-26 with a 5 per cent increase in residential rates and a 7 per cent increase for commercial, industrial and vacant properties up for consideration but will invite feedback from residents prior to adoption.

As part of the chief executive officer’s reports, item 10.6.4 budget 2025-2026 differential rates noted the City of Kalamunda’s financial results for the year ending June 2023 highlighted a deterioration in their operating surplus ratio (OSR).

The document goes on to explain the ratio is a measure of a local government’s ability to cover its operational costs and have revenues available for capital funding or other purposes.

It also explains that the OSR is declining as revenue is not matching operating expenditure, depreciation expenses have increased following the revaluation of city assets, and the growing cost of providing services and assets, with costs pressures experienced especially in building and construction costs and their ongoing maintenance.

The report explains that for the coming year, the city continues to see volatility in several categories of construction costs placing pressure on building and construction projects.

Currently, the city’s net assets equate to about $975 million gross replacement cost, and the report states that maintaining and renewing such a large asset base and delivering a wide range of services requires revenue to match the recurrent operating costs required.

“The city’s main revenue source is heavily dependent on rates,” the report said.

“The city has undertaken a thorough review of its cost structures, revenue generation opportunities and service levels in order to formulate a financially responsible budget.

“The city’s financial sustainability will be critically dependent upon maintaining close scrutiny over costs, leveraging commercial opportunities and developing sustainable rate setting strategies.”

The report gave five options for the council to consider to address the OSR.

One is to do nothing but is not recommended by the officer as it is financially unsustainable.

Option two is to increase revenue through rates, fees, charges as well as new sources of income such as exploring improved offerings at Kalamunda Performing Arts Centre, carbon trading with the implementation of FOGO etc.

Option three is to decrease operating expenditure.

Option four is to decrease capital expenditure by retiring assets and relocating or co-locating utilities and services.

Option five is a combination of increasing revenues through rates, fees, charges and new income sources, and decreasing operational and capital expenditure.

“The council has chosen option five which reflects the proposed increase to rates for 2025-26,” the report said.

Council voted unanimously for the advertisement of the rates ahead of June 30 with councillors David Modolo and Lisa Cooper speaking to the motion.

“In my own consultation with the public it’s clear to see that many feel the justification of increase is just not there, that they’re not getting that value for the increase suggested,” Cr Modolo said.

“Many others are wondering: have we done enough to cut our spending before we go ahead and hit the ratepayers’ hip pockets at a time when people can least afford it?

“Ninety percent of all money coming into the city is made up of rates and fees and charges.

“When labor costs are sky-high, when material costs are sky-high, this is not the time for new projects.

“Please, council, take feedback from the community on board, particularly when it comes to our spending.”

Cr Cooper said while no one liked rate rises, it was vital the council’s decision enabled the city to meet its current and future obligations and continue to operate in a financially sustainable manner.

“Whilst acknowledging that there are many ratepayers doing it tough through this cost of living crisis, I would encourage them to reach out to the city who can assist with payment arrangements,” she said.

“Our community has high expectations that the city will deliver on new facilities, upgrades to parks, maintaining footpaths and roads, as well as providing many services.

“I think it’s also really important to acknowledge the city is actively pursuing new revenue streams which will reduce its reliance on rates in the future.”