The council surplus for the end of the 2013 financial year is firming up at $5.5 million, according to figures in the 11 month financial report received this week.

Tauranga City Council. Photo: file.

At the end of May the council operating surplus was $4.7 million, with other council revenue $4.3m above budget year to date.

Revenue from operations is $3.1m ahead of budget.

Interest on investments so far this year is $620,000 ahead of expectations and unbudgeted revenue of $300,000 has been received from TECT relating to the electricity account.

Within activities, major favourable variances in the year include building related revenue with $600,000 due to an increase in building activity, and transportation of $400,000, Route K and parking.

The full year result is brought down a little by some below budget returns.

Forestry harvesting revenue of $500,000 from water catchments will not be received until 14/15, offsetting favourable water by meter revenue of $300,000.

Library and Baycourt revenue is expected to be below budget by $300,000 because of overly optimistic revenue budgets.

The capital works budget is ahead of budget because some early payments have been received.

The full amount of NZTA contribution to Tara Road an additional $913,000 for the full year, and $230,000 for the new signals outside Tauranga Hospital, were not budgeted as revenue items for the current year.

The Port of Tauranga's $200,000 contribution to the Pilot Bay Boardwalk was also not budgeted. The full year projection also includes Regional Council funding of $1.8m toward the Southern Pipeline, which is invoiced in June.

Development contributions are expected to be on, or slightly above budget, at the end of the year. Vested revenue for the full year is expected to be below the full year budget due to lower activity.

The council's personnel costs are $1.25 million below budget due to delays in filling positions in the organisational structure. A $416,000 overspend in May is largely due to below budget capitalisation.

A review and correction of capitalisation for the year will be undertaken this month with year-end results expected to be closer to budget than indicated by the May result, says treasurer Mohan De Mel.

Some work required in HR systems has been slow to get underway and a carry forward may be requested. The variance relating to contractors and consultants costs covering vacancies is reflected in other expenses being over budget.

The less than budgeted capital spend is also causing financial costs to track below budget. Year to date, saving in finance cost is $1.2m. Full year finance cost is projected to be $1.1 m favourable variance.

Overall operating and maintenance costs are tracking favourably to budget due to below budget costs including electricity and chemical savings, says Mohan.

Consultants' costs are above budget as a result of consultants covering for staff vacancies. A write off of past years' capitalised salaries for the now completed STAR project accounts for $2.34m of above budget costs. This operating expenditure is funded by loans as per the revenue and financing policy and offsets the otherwise favourable result for other expenses.

The full year projection for net debt is below $370m, mainly due to low capital spend to budget.

Capital expenditure to the end of May is 51 per cent of full year budget. The projected year end result is 59 per cent of budget, which would require expenditure in June of $7m. This would result in an underspend of 2014 budget of $28m, of which $16m has been re-budgeted to 2014/15. The rest is identified as savings or works to be undertaken in a later time period.