Jersey Harbours: Capital Budget Transfer to Revenue Expenditure

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A decision made on 30 March 2010 to approve the transfer of funds from Jersey Harbours capital budget to Jersey Harbours revenue budget

Decision Reference: MD-E-2010-0056
Decision Summary Title :	DS - Jersey Harbours – Capital Budget Transfer to Revenue Expenditure		Date of Decision Summary:	22.03.2010
Decision Summary Author Title:	Finance & Business Resources Director		Decision Summary: Public or Exempt? (State clauses from Code of Practice booklet)	Public
Type of Report: Oral or Written?	Written		Person Giving Oral Report:	N/A
Written Report Title :	WR - Capital Budget Transfers to Revenue Expenditure		Date of Written Report:	22.03.2010
Written Report Author Title:	Finance & Business Resources Director		Written Report : Public or Exempt? (State clauses from Code of Practice booklet)	Public
Subject: 2010 Budget Transfers from Capital Heads of Expenditure to Revenue Expenditure.
Decision(s): The Assistant Minister approved the transfer of £400,000 from the Jersey Harbours capital budget to the Jersey Harbours revenue budget.
Reason(s) for Decision: The States of Jersey previously approved 2010 capital heads of expenditure in the 2010 Business Plan. This included XY1007 Minor Remediation Projects Civil. This work has subsequently been reclassified as Revenue expenditure, in accordance with GAAP accounting principles.
Resource Implications: N/A
Action required: For the Finance Director to seek the Treasurer of the States approval for the transfer. Once approval is obtained, the Finance Director to action budget transfers.
Signature:		Position: Assistant Minister – Economic Development
Date Signed:		Date of Decision (If different from Date Signed):

Jersey Harbours: Capital Budget Transfer to Revenue Expenditure

Report

Report Name: Transfer of Budgets PUBLIC

Support for Ministerial Decision Capital/Revenue Budget Transfer – Economic Development Department – Jersey Harbours

Date: 23.03.2010

Purpose of the report

To approve the transfer of £400,000 budget from Jersey Harbours capital to Jersey Harbours revenue, to align budgeting with Generally Accepted Accounting Principles (GAAP).

Background

The States of Jersey has implemented Generally Accepted Accounting Principles (GAAP) in 2009. GAAP accounting requires that expenditure should be accounted for as capital only if it meets the GAAP accounting definition of capital expenditure, and revenue otherwise. Previously, ‘capital’ budgets have represented whatever the States Assembly voted as capital. The States have already approved capital allocations for 2010 in the 2010 Business Plan. This budget transfer moves budget between capital and revenue so as to align the budgeting treatment of 2010 expenditure with the GAAP accounting treatment.

Subsequent to approval of the Business Plan, site investigations have been carried out during Q3/Q4 2009 and Q1 2010. The site investigations relate to: scouring problems under Albert and Victoria Piers, settlement of the deck slabs on New North Quay, movement of the eastern wall of the La Collette Yacht Basin and degradation of the render on the walls of St Helier Marina. The proposed necessary work has now been reclassified as Revenue based expenditure with reinstatement scope only rather than Capital expenditure. This is a restatement exercise that only affects expenditure that is expected to be incurred in 2010.

The following table identifies transfers between revenue and capital and vice versa that meet the relevant GAAP definitions.

<><><><><>	<><><><><>	<><><><><>
<><><><><>	Capital Budget at 1st January 2010	Transfers (to)/from revenue budget (2010 expenditure only)	Re-stated Capital Budgets after 2010 expenditure transfer only
<><><><><>	£	£	£
Minor Remediation Programme	400,000	(400,000)	-
Total	400,000	(400,000)	-

Operating Account<><><><><>	<><><><><>	<><><><><>	<><><><><>
<><><><><>	2010 Net Revenue Expenditure before transfer	Adjust for 2009 Capital Projects Capital/Revenue Transfers	Adjust for pre-2009 Capital Projects Capital/Revenue Transfers	2010 Net Revenue Expenditure after Transfer
<><><><><>	£	£	£	£
Income <><><><><>	<><><><><>	<><><><><>	<><><><><>
Port of Jersey	8,926,000 <><><><><>	<><><><><>	<><><><><>	8,926,000
Coastguard	1,123,100 <><><><><>	<><><><><>	<><><><><>	1,123,100
Jersey Marinas	3,861,500			3,861,500
Notional Interest	250,000			250,000
<><><><><> <><><><><>	<><><><><>	<><><><><>	<><><><><>
Total Income	14,160,600 <><><><><>	<><><><><>		14,160,600
<><><><><> <><><><><>	<><><><><>	<><><><><>	<><><><><>
Expenditure <><><><><>	<><><><><>	<><><><><>	<><><><><>
Port of Jersey	6,960,600		200,000	7,160,600
Coastguard	1,503,200			1,503,200
Jersey Marinas	3,286,000		200,000	3,486,000

Total Expenditure	11,749,800 <><><><><>		400,000	12,149,800
<><><><><> <><><><><>	<><><><><>	<><><><><>	<><><><><>
Gross Operating Surplus	2,410,800 <><><><><>		-400,000	2,010,800
<><><><><> <><><><><>	<><><><><>	<><><><><>	<><><><><>
Less: <><><><><>	<><><><><>	<><><><><>	<><><><><>
Depreciation	2,960,000			2,960,000

<><><><><> <><><><><>	<><><><><>	<><><><><>	<><><><><>
Net Surplus <><><><><>	(549,200) <><><><><>		-400,000	(949,200)
<><><><><> <><><><><>	<><><><><>	<><><><><>	<><><><><>
<><><><><> <><><><><>	<><><><><>	<><><><><>	<><><><><>
Transfer to Trading Fund	£ 2,410,800 <><><><><>		-400,000	2,010,800

The effect of the transfer would be to increase the Department’s 2010 operating expenditure cash limit from £11,749,800 to £12,149,800, an increase of 3.4%, and reduce the value of capital budgets by an equivalent amount. This does not change the total amount of expenditure approved by the States.

Recommendations

To approve the net transfer of £400,000 budget from capital to revenue within Jersey Harbours, to align budgeting with accounting treatment.