Goulburn Mulwaree Council's CEO has resigned citing an "untenable relationship" with new mayor, Nina Dillon.
Aaron Johansson advised the mayor by phone on Friday of his resignation. While he gave four weeks' notice, it took immediate effect, given annual leave.
Mr Johansson said it was completely his decision and his only payout would be four weeks' leave. He cited "differences of opinion" between himself and the mayor over the health of council finances as a key reason. But multiple factors played a role.
"It is a relationship breakdown between the mayor and myself that for me is untenable," he told ACM.
"It's important for the mayor and the CEO to have a close working relationship for the community to move forward, and in the current circumstances, this won't occur."
In an email to staff, he wrote that it was "fundamental that this partnership functions harmoniously, built on trust, respect, and shared objectives."
Mr Johansson said the mayor's statement at the most recent council meeting that the organisation was financially healthy, heavily influenced his decision. However other factors were also at play.
"In effect, the mayor misrepresented the financial situation and for me that's untenable," he said.
"I firmly believe that if the council doesn't make some hard decisions, it will be in administration in the next two years."
His resignation came halfway through his five-year term. It was also three months after the former council granted him a 3.75 per cent salary increase for the remainder of his contract for "above satisfactory performance."
Cr Dillon said there had been little time to develop a working relationship with Mr Johansson in the three weeks of the new council
"In meetings and briefings, everything was pleasant but my feeling was he'd made up his mind (to resign) before the poll was declared," she said.
"Whether he feels he can't work with me, I'm not sure. But as far as I was concerned, there was nothing untoward."
Cr Dillon, an accountant, campaigned against the council's initially proposed 51.2 per cent special rate variation before the election. IPART reduced the rate rise to 22.5 per cent over one year.
Three of the five people on her ticket were elected to the council, with Ms Dillon topping the poll.
Despite differences of opinion with Mr Johansson over the council's financials, Cr Dillon said she was prepared to "give the (working) relationship a good try," following her election.
"At the end of the day, nothing significant had happened and there was no direction from the council to do anything different. We were trying to move forward," she said.
The mayor said she didn't try to dissuade him because it "was clear he'd made up his mind." Asked whether she was disappointed over his decision, Cr Dillon said she'd hoped to reach compromise but accepted the situation.
Mr Johansson, a chartered accountant, said the organisation wasn't financially sustainable and this was reflected in audited financial statements presented at the October 22 meeting.
"The mayor chose not to provide that information and to continue on the 'nothing to see here, everything's fine' path, which it's far from," he said.
"In order for us to be sustainable, there needs to be a reduction in services. There's no more cost cutting that can occur unless you stop doing things. Staff have been working on a financial sustainability review for the past three months to present to the community and the council for some solutions."
Mr Johansson said this would involve hard decisions on what services the council no longer performed. He argued the council had a revenue rather than an expense issue. This wasn't unique; other councils were in "financial peril" and something needed to change in the way local government was funded.
Mayor differs on finances
Cr Dillon said the CEO had told her after the October 21 meeting that he didn't believe her statement regarding the financial reports was appropriate.
"I replied that it shouldn't have been an issue as I was only explaining what the statements said. I don't think I have anything to answer for," she said.
She had highlighted a $17.26 million operating profit. This included more than $39 million in grants for capital and operating purposes and $30.5 million in depreciation.
But when grants and contributions were removed, the net operating result was a $4.13 million deficit.
Cr Dillon maintains it is "not realistic accounting" to exclude grants because all councils receive them.
Moreover, "depreciation" was a "non-cash expense" that the council didn't need to worry about in regard to outgoing funds. Cr Dillon said this wasn't quarantined anywhere and was still available in the budget to be used.
Mr Johansson disagrees with this point and says all councils need to allow for depreciation. Over time, like others, Goulburn Mulwaree Council "hadn't cash-backed its depreciation," due to the rate peg, and now there was little provision.
He said this was especially an issue with large assets such as the new Goulburn Performing Arts Centre and the aquatic centre.
However, the CEO and Mayor do agree that the funding method for local government should be overhauled.
Cr Dillon said she was continuing to lobby state and federal government for a "fair share" and wasn't alone in that fight.
While some services may need to be "re-prioritised," the mayor doesn't foresee any staff cuts.
The mayor said all councillors were keen to ensure a positive relationship with all staff remained their "high priority."
Meantime, Mr Johansson says he's looking for another job in local government that will likely mean moving his family away from Goulburn.
"I've enjoyed my time here. We have a great team and I've met some good friends," he said.
The former CEO told ACM he was proud of the council's organisational reform, where all staff have "clear goals." One Raceway's re-opening was also a "significant achievement" after he was hit with the former Wakefield park controversy three days after he became CEO.
"The residential growth has been quite significant and and I'm quite proud of the capital delivery work we've done. As an organisation we've been focused on delivery," Mr Johansson said.
Cr Dillon will meet with directors on Monday, November 4 regarding an interim CEO. She will also discuss the matter with councillors.
An extraordinary council meeting will be held on Thursday, November 7 to recommend an acting CEO.
"I feel quite confident everything will be perfectly fine and we have nothing to be really alarmed about," Cr Dillon said.
"These things have happened in the past. I'm sure they'll occur again...We just want the right person who will fit the council and community."
Recruitment for a permanent replacement could take three to six months.
