In past years, council has been debt-free and been able to finance projects from its cash reserves which at one point totalled over $40 million.

Despite this healthy situation, however, criticism was at times levelled at council because it would not borrow money for what was considered by some to be important community projects.

The world wide financial collapse dampened investment earnings, and resulted in some losses to investments.

Since then, council has taken the plunge to borrow funds to pay for important projects including:

Trundle sewer scheme - $1.5 million

Parkes Airport runway - $2million

30 Welcome Street (former DOCs building) - $500,000 and Henry Parkes Centre (museum etc_ - $950,000.

This has totalled $4,950,000 in loans.

Director of Corporate Services, Les Finn told last week’s meeting of council that principal and

interest on the loans was about $400,000 per annum.

‘Historically council has not for many years used borrowings to fund the renewal or construction of infrastructure,’ he explained.

‘But a balance between equity and borrowings is now seen as an appropriate strategy.

‘Importantly however, borrowings will require recurrent debt servicing obligations that must be funded in future budgets.

‘In other words, we need to keep councillors well aware

that we will have a very tight budget.’

Mr Finn said servicing of the Welcome Street loan was planned to be partially funded from rent, while the Henry Parkes Centre loan would be funded from reducing expenditure in the council’s long term plan and the proceeds of the sale of property in Currajong Street.

Mr Finn said the cost of loans was higher than originally envisaged and this would have implications for future debt servicing costs faced by council.

‘It could also impact on the timing of future projects where the use of loan funds is envisaged,’ he added.