Colac Otway Shire’s budget looks $5.73 million in the red, but the CEO says don't panic

A $5.73 million deficit in Colac Otway Shire Council's newly adopted budget has been described as an “accounting anomaly”, with the shortfall caused by an early payment of $8 million in federal grants.

What happened: Councillors unanimously adopted the 2026-27 budget last Tuesday, which included a rate rise of 2.75 percent, as well as $1.5 million included to fund a new bike track and upgrades to the Deans Creek-Pound Road intersection.

Early payday: Chief executive Andrew Tenni said the draft budget originally forecast a $709,000 surplus, but a change to the timing of federal assistance grants meant 80 percent of the council's expected 2026-27 allocation of roughly $9.8 million would instead be paid before June 30.

• “The forecast income for 2025-2026 will increase by 80 percent, and our expected income for 2026-2027 has declined, and I think it's around $8 million that is the change,” Tenni told the meeting. 

“It's a bit of an accounting anomaly ... that's what's led to what in our budget papers is now appearing to be a net deficit of $5.7 million in 2026-2027.”

• He said despite being recognised in the previous financial year, the funding would carry over and would be available to council in 2026-27.

Big patch, small cash pool: Mayor Jason Schram said the budget reflected the challenge of maintaining a large rural municipality with limited revenue.

“We've got to look after a massive area, on not much [money],” he said.

“Colac Otway Shire looks after 3,500 square kilometres and we generate just over $31 million in rates, which is a lot of money, but compared to a city council that might be a hundred square kilometres ... and generate income from many other ways and might have a couple of hundred million dollars in rates.”

On the rise: Local ratepayers across western Victoria have seen a continued upward trend in rates, with multiple municipalities announcing increased rates in their budgets for the new financial year. 

• Colac Otway Shire joins a slew of other councils having announced or proposed a rate increase between 2.25 and 2.75 percent, including Ararat, Warrnambool, Ballarat, Southern Grampians and Moyne councils.