Out of 31, 26 councils operate on deficit

Parliament learnt on Friday that 26 out of 31 councils presently operate at a deficit.

In response to a query from Member of Parliament (MP) for Thamaga-Kumakwane, Palelo Motaosane, regarding the deficit status of all councils from the financial year 20232024, Assistant Minister of Local Government and Rural Development, Talita Monnakgotla, was further asked whether she thinks this will affect the said councils.

“These deficits have an adverse effect on service delivery, as councils cannot execute all their planned activities. “Given this, councils are being encouraged to exercise financial prudence; prioritise expenditure and implement cost containment measures,” she said. Monnakgotla added that continuous efforts are underway by government to rationalise the budget to assist Local Authorities.

For the current financial year, 2023-2024, she highlighted that the government augmented the Revenue Support Grant (RSG) by P100 million to cover rising operational costs, with plans to extend this arrangement to the proposed budget for the financial year 2024-2025. However, Monnakgotla acknowledged that this augmentation is insufficient due to the constrained government resource envelope.

As a result, she said, councils are encouraged to seek alternative revenue sources.

In that regard, the junior minister said property rating, the largest source of income for Local Governments, has been extended to district councils with substantial economic levels and activity to enhance revenue maximisation efforts.

She said the ministry will also review current licence fees, considering the different sectors of the economy.

Monnakgotla added that the allocation of the Revenue Support Grant is guided by respective local authority budget bids, the nature of expenditures, and the ability of the local authority to generate own-source revenue.

She outlined that priority is given to statutory and mandatory expenditures, such as personnel payments, social welfare benefits, and school stationery.

Monnakgotla revealed that the remainder of the funds for discretionary expenditures are allocated based on district budget bids.