The City of Kwinana has revealed its 2026-27 budget surplus is $5 million more than expected just months after it said it needed to increase ratepayers’ bills.

The budget had been forecast to have a $7,063,261 surplus but the council was told at its October 21 meeting it was now expected to be $12,248,311.

The budget included a 4.75 per cent increase in rates revenue, higher than the 4.5 per cent proposed when the city released the budget for public comment.

City officers had recommended the higher increase after reviewing the city’s financial position and economic conditions, citing “volatile” construction and material costs, and major projects.

For the average residential ratepayer, the higher rate is estimated to represent an increase of about $1.56 a week, but individual rate changes will vary depending on each property’s valuation and rating circumstances.

In a statement released after the budget was adopted, mayor Peter Feasey said “every part” of the budget had been examined to minimise the impact on ratepayers.

A report to the October 21 meeting listed savings from completed projects, other projects being carried forward, and higher income than expected from fees, interest and rates contributing to the surprise surplus.

Cr David Acker said he was a “bit surprised” at the surplus and wanted to know how it happened and what changes could be made to budget forecasting to prevent another large surplus.

He acknowledged it was better to have more money coming in instead of going out.

“Since I’ve been on council for three years, we’ve been cash-strapped,” Cr Acker said.

City CEO Wayne Jack said it was difficult to forecast changes in project timeframes and revenue.

“We take a conservative approach in terms of managing our fees and charges,” he said.

“We are a growth council and so we have a lot of fees come through for planning and building that fluctuates quite considerably.

“Can budget managers get more certainty around it? Absolutely. But that comes with some risk if we get that wrong and we don’t generate that income.

“I also reiterate having a surplus is much better than having a deficit.”

Mr Jack said the city held quarterly budget reviews, which not many other councils did.

“It’s not a bad thing having savings because it also reflects that there is management occurring in terms of how we’re delivering our projects,” he said.

Cr Michael James Brown said residents who would be seeing “millions appear” after rates had been increased would be asking questions.

“(They may be asking) If we had been more certain ahead of time, would the recommendation have come to raise rates in the same way,” he said.

Mr Jack said the rates income would have still been needed because there was no certainty over income from fees and charges.

“You need the certainty around the rating income, particularly because what the rating income does is provide the base for your future level of income coming into the council,” he said.

“You have got no certainty around interest rates being up high, getting more money coming through in interest. You’ve got no certainty around getting the planning or the building applications, so you need to have a level of rating income, but you can adjust it on a yearly basis to take some risk around that.”

Mr Feasey gave what he called an “accounting 101” explanation.

“If we raised a million dollars in rates, if we didn’t raise that million dollars in rates because we had a bonus this year, next year if there was a rate rise and we didn’t get the bonus, it would mean that the budget would start a million dollars behind already because we didn’t have the bonus and we didn’t raise the rates,” he said.

About $3m will be transferred to help pay for works on Recquatic and $1m for the city centre precinct plan.

Mr Jack said the Recquatic refurbishment was one of the city’s biggest projects, which had a high level of risk and the extra money would give it some “flexibility”.

“Should those funds not be required, they’ll be returned ... so it’s just providing some additional contingency for what is a major project,” he said.

Cr Balian Miller asked how these would have been funded if the city did not have a surplus.

Mr Jack said the city was managing to a budget, which could mean there would be compromises.

“By putting additional funding into it, you are providing the contingency and the flexibility to be able to ensure that the project can achieve a number of the outcomes in terms of pool space, in terms of gym space and in terms of the fit-out,” he said.

Mr Feasey said this meant the city could then afford the water to fill up the pool.

Deputy mayor Barry Winmar said it was a pleasure to be in the city’s current position.

“We need to make sure that we can budget and prepare as much as we can,” he said.

“And as we said, nothing is definitive. Projections are projections.”

The report said operating expenditure had increased by nearly $3m, which included about $450,000 in employee costs from the city taking over the Kwinana Golf Course.