THE Mornington Peninsula Shire has reworked its 2025/26 budget after accumulating an $8.2m deficit against its forecasts during the first six months of the financial year.
Information provided to councillors stated “The mid-year reforecast involves a comprehensive review of all operating budgets, capital works programs, and operating project allocations, including year-to-date income and expenditure, as well as the projected financial position for the period January to June 2026”.
“The primary focus of the review was to identify permanent variances between year-to-date results and the forecasted income and expenditure relative to the 2025/2026 Adopted Budget and ensure that we retain a balanced budget.”
The report stated a need to ensure a “balanced forecast was achieved despite the ongoing challenges faced by the Mornington Peninsula Shire”.
The reforecasting performed by the shire’s finance team identified a current year expected deficit of $8.2m, compared to the budget.
The report stated the primary drivers for the deficit were once-off occurrences with the part year effect of savings achieved of $3.4m compared to the budgeted savings figure of $10m.
Listed on the itemised report as the largest contributor was a $4.3m materials and services savings shortfall, redundancy costs of $3.5m, employee costs savings shortfall of $2.3m and an increase in recycling and green waste processing costs of $1m.
Other material movements included unforecast inflows due to a higher than expected amount of interest income ($2.9m) and higher waste disposal user fees ($1.4m).
To offset the shortfall, councillors authorised the release of unspent funds from prior years ($14.5m), and the release of the FY26 unallocated budget ($5.1m).
Councillors took the opportunity in the mid-year update to remove income from land sales from forecast amounts, with the report stating “Achieving the current carry-forward land sales forecast will be challenging… Applying the carry-forward surplus to remove the existing land sales forecast of $7.2m will reduce reliance on these sales”.
The report also recommended the adoption of a $4.2m “waste reserve” to, in part, “To support Council’s long-term financial sustainability in light of significant upcoming expenditure required at the Rye Landfill site and reduced borrowing capacity”.
A $1.9m increase in the Capital Works Program reflects expenditure on Peninsula Community Theatre, Hastings Senior Learning Hub and Peninsula Trail Somerville to Baxter.
Due to the deficit, the 17 June 2025 amendment to reconsider grants at the mid-year reforecast to the Shire’s arts and culture creative grants, Willum Warrain’s reconciliation program and Dolphin Research Institute’s education program were not considered by councillors.
First published in the Mornington News – 7 April 2026
