If you pay rates in Tamworth and want to know whether the council lives within its means, its own draft accounts say that in 2025-26 it did not. Leaving out grants that can only be spent on new assets, the council's income fell $14.5 million short of its operating costs, including depreciation, in the year to 30 June. That is wider than the $11.2 million shortfall the year before, and a long way from the $11.2 million surplus the original budget expected. The figures are a draft: the audit began on 7 September and the audited statements go to a public meeting on 10 November.

Counting capital grants, the result is a surplus of $21.2 million, down from $71.0 million in 2024-25. The council's Long Term Financial Plan explains why it looks past that number: the result before capital income is considered the more relevant measure of sustainability as it excludes income that can only be used for the acquisition of new assets.

Where the year went off budget

The statements carry the council's own explanation of every line more than 10 per cent away from the original budget. Two cost lines did most of the damage. Materials and services came in at $84.0 million against $52.9 million budgeted, 59 per cent over. The statements say that is made up of many factors, including $13.6M of works classified as capital in nature which subsequently were identified as operational, $9.1 million of non-recurrent operational works carried over from the year before, and extra work for Transport for NSW. Depreciation, amortisation and impairment came in at $59.4 million against $47.6 million, which the statements put down to difficulties in estimating future revaluation increases and to when assets were completed.

Budget against draft actual, 2025-26, $ million

The four lines that moved most. Bars to scale; the longest is $84.0 million.

  • Materials and services59% over Budget52.9 Draft actual84.0
  • Depreciation, amortisation and impairment25% over Budget47.6 Draft actual59.4
  • Net loss on disposal of assets (never budgeted)unbudgeted Budget0 Draft actual7.3
  • User charges and fees (income)28% over Budget49.5 Draft actual63.3
Budgeted result before capital grants+$11.2m
Draft actual−$14.5m
Draft 2025-26 financial statements, Income Statement (page 4 of 85) and note B5-1 Material budget variations (pages 28 and 29). The percentages are the statements' own. Unaudited.

Income helped, but not enough. User charges and fees were $13.8 million over budget, $7.3 million of it from new and additional work for Transport for NSW, and operating grants were $5.2 million over, $3.2 million of that because the federal assistance grant was paid in advance. The council does not budget for losses when it disposes of assets, and in 2025-26 that loss was $7.3 million. Set it aside and the operating result before capital grants is still a deficit of about $7.2 million (our arithmetic from the statements' figures).

Three years below the benchmark, and five of six passed

The statements also report six performance measures with their benchmarks. Tamworth passes five, some comfortably: it holds 16.58 months of cash expense cover against a benchmark of three. The one it misses is the operating performance ratio, which compares the operating result before capital grants with operating income, with some items excluded. It was −0.90 per cent in 2023-24, −2.07 per cent in 2024-25 and −4.02 per cent in 2025-26, against a benchmark above zero. By fund, the general fund was −11.57 per cent, much as the year before, the water fund −0.04 per cent and the sewer fund 28.03 per cent.

The six measures, consolidated, 2025-26 (draft)

Each against the benchmark printed beside it in the statements.

  • Operating performance ratioBenchmark: above 0.00%−4.02%Missed
  • Own source operating revenue ratioBenchmark: above 60.00%74.34%Met
  • Unrestricted current ratioBenchmark: above 1.50x2.02xMet
  • Debt service cover ratioBenchmark: above 2.00x3.21xMet
  • Rates and annual charges outstandingBenchmark: below 10.00%7.41%Met
  • Cash expense cover ratioBenchmark: above 3 months16.58 moMet
Draft 2025-26 financial statements, note H1-1 Statement of performance measures, consolidated results (page 80 of 85). Unaudited.

The plan adopted the same night

Item 8.2 on the same agenda was the Long Term Financial Plan for 2026-27 to 2035-36. It had been on exhibition from 23 July to 19 August and drew one submission, from a Manilla resident asking for longer opening hours at the Manilla disposal facility. Councillors adopted it 8 votes to 0 (minute 257/26). Item 8.3, straight after, was the draft statements, and councillors voted 8 to 0 to record the council's opinion on them and to present the audited version on 10 November.

The two documents do not share a starting point. In its general fund scenario the plan says where its numbers begin:

the base year of 2025/2026 is from the 31 December 2025 Budget Review with 2026/2027 to 2035/2036 projections based on assumptions

Long Term Financial Plan 2026/2027 to 2035/2036, General Fund Planning Scenarios, page 16 of 50.

From there the plan budgets a consolidated operating result before capital grants of $5.1 million for 2026-27 and projects it rising every year, to $22.4 million in 2035-36. Its operating performance ratio is 2.53 per cent in 2026-27, rising to 8.67 per cent. The general fund stays below zero for three years, at −1.01 per cent in 2026-27, and turns positive in 2029-30. Its general fund scenario assumes rate rises of 3.2 per cent in 2026-27, 2.5 per cent a year for the three years after and 3 per cent a year from then on, and builds in $3.6 million of savings from vacant positions, minor budget savings and planned savings. It budgets materials and contracts at $55.4 million and depreciation and amortisation at $55.8 million for 2026-27. The plan and the statements are separate documents that calculate their ratios separately, so a ratio in one and the same-named ratio in the other are close cousins, not twins.

How the two documents line up

  • 30 June 2025Original 2025-26 budget adopted: a surplus of $11.2 million before capital grants.
  • 31 December 2025Budget review that the plan takes its 2025-26 base year from.
  • 30 June 2026The 2025-26 year ends.
  • 23 July to 19 August 2026Draft plan on exhibition; one submission.
  • 7 and 8 September 2026Audit of the 2025-26 statements begins; the draft goes to the Audit, Risk and Improvement Committee.
  • 22 September 2026Council adopts the plan, then records its opinion on the draft statements showing a $14.5 million deficit. Both votes 8 to 0.
  • 10 November 2026Audited statements and the auditor's reports at a public council meeting.
Dates and the budget figure from the draft statements (Income Statement and note B5-1), the 22 September business paper (items 8.2 and 8.3), the minutes and the plan (page 16 of 50).

Our view

Tamworth is not in financial trouble on most of the tests in its own statements: it has cash, it can service its debt and it collects its rates. But the one test that asks whether day-to-day income covers day-to-day costs, including wearing out its assets, has gone the wrong way three years running, and 2025-26 ended $25.7 million away from its budget on that line (our arithmetic). Some of that the council explains as accounting, works reclassified from capital and a disposal loss it never budgets, and some as one-off work carried over. That may well be right. What a ratepayer cannot yet tell from the documents is how much of the $31.1 million materials overrun will come back next year. The plan budgets $55.4 million for materials and contracts in 2026-27, close to last year's budget and well under last year's draft actual, and it was built from a December estimate of a year that turned out differently. The plan itself warns that the council has limited capacity to fund expenditure on further new assets without a corresponding detrimental effect on funding available for renewal on existing assets. When the audited figures land on 10 November, the council should say whether the plan's surpluses still hold from that starting point.

What to watch

The audited 2025-26 statements and the NSW Audit Office's reports at the 10 November meeting, and whether the audit changes the operating result; and the council's quarterly budget reviews for 2026-27, which show whether materials and services are tracking the plan.

Sources

  1. Tamworth Regional Council, Item 8.3, Annexures 1 and 2: draft General Purpose and Special Purpose Financial Statements for the year ended 30 June 2026 (102-page PDF, read 8 October 2026): the Income Statement (page 4 of 85), note B5-1 Material budget variations (pages 28 and 29), and note H1 Statement of performance measures, consolidated and by fund (pages 80 and 81).
  2. Tamworth Regional Council, Business Paper, Ordinary Council Meeting, 22 September 2026 (read 8 October 2026): item 8.2 on the Long Term Financial Plan, its exhibition and the one submission (pages 18 and 19), and item 8.3 on the financial reports, the audit start, the committee review and the 10 November meeting (pages 19 to 21).
  3. Tamworth Regional Council, Minutes, Ordinary Council Meeting, 22 September 2026 (read 8 October 2026): minute 257/26 adopting the plan and the item 8.3 resolution, with the votes (pages 7 and 8).
  4. Tamworth Regional Council, Long Term Financial Plan 2026/2027 to 2035/2036, Annexure 1 to item 8.2, Ordinary Council Annexures, 22 September 2026 (127-page PDF; the plan is annexure pages 30 to 79, read 8 October 2026): the measure of sustainability (page 10 of 50), the consolidated income statement (page 11), the general fund scenario and its base year (page 16), and the operating performance ratios (page 43).

How we did this

We downloaded the four documents from Tamworth Regional Council's business papers page on 8 October 2026 and kept copies. The financial statements are a draft: the council put them to its 22 September meeting before the audit was finished, and the audited version may differ. The statements report figures in thousands of dollars and the plan in dollars; we have rounded both to the nearest $0.1 million. The plan's pages are scanned images with no text layer, so we read them by eye, and the quotations from it are marked as checked against the page by hand. Our arithmetic: the $25.7 million gap is the budgeted $11.217 million surplus plus the draft $14.510 million deficit; the $7.2 million is the $14.510 million deficit less the $7.321 million disposal loss; the $31.1 million materials overrun is the statements' own variance. The comparison of the plan's 2026-27 budget with the 2025-26 draft actuals sets one year's budget beside another year's result, and the plan's depreciation line excludes impairment where the statements' line includes it. We did not contact the council for this piece. The “our view” section is opinion based on the documents described.