NEWCASTLE councillors have formally endorsed significant budget cuts as part of a set of financial principles that will strangle funding for proposed capital projects.
Lord mayor Jeff McCloy used his casting vote to pass the principles, after a tense debate and a deadlocked vote.
The decision formalises council support for 10 per cent spending cuts over two years and maintaining a surplus of about 2.7per cent, which is roughly $8 million annual profit.
Council acting general manager Ken Gouldthorp told councillors they must recognise ‘‘the seriousness of the situation that the organisation is in’’.
Mr Gouldthorp said the council’s financial position had been partly caused by a failure to implement recommendations from the 2009 sustainability review process.
‘‘Over a period of time, some of the recommendations for savings have been eroded away, in some cases by resolution of council,’’ Mr Gouldthorp said.
The principles adopted throw several projects linked to the recent 8.6 per cent rates increase into doubt.
The $21 million art gallery development is now the city’s bottom priority for capital spending.
Other promised projects, such as upgrading libraries and swimming pools, face significant hurdles.
One of the adopted principles ensures that ‘‘no project commences until funding for the full cost of the project is secured or has certainty’’.
Labor councillor Nuatali Nelmes said the council needed to address its financial situation but should search for efficiencies instead of cuts to ‘‘core business’’ like road maintenance.
‘‘I think we’ve got some serious efficiency problems within this organisation [and] these principles don’t really turn the spotlight on ourselves to look for those efficiencies,’’ Cr Nelmes said.
Cr Lisa Tierney (Liberal) said the previous council had been overly ambitious to attempt to deliver nine large projects when much of the funding was ‘‘subject to maybes and what ifs’’.