Draft budget raises questions
THE advert in TotT dated Thursday April 5, calling for public comments on the draft Integrated Development Plan (IDP) and tabled budget, refers.
The Ndlambe Ratepayers Forum (NRF) studied the draft budget and it raises a number of issues:
ý In the executive summary, operating expenditure is given as R420-million, but according to Annexure 2 operating expenditure is given as R432-million and revenue R318-million, giving a deficit of R124-million. This budget deficit is against the Ndlambe Budget Policy.
ý Proposed revenue increases: Water R38 281 471 19.87% Electricity R66376 619 25.78%
Sanitation R11383 097 65.50%
Refuse R16846 711 35.85%.
Where are all these massive increases in revenue suddenly going to come from when the proposed water tariff increase is 5%, electricity 6.84%, sanitation 5.5% and refuse 5.5%? Surely, there should be a correlation between increases in rates income (8.4%) and the income from above services?
ý According to National Treasury Municipal Budget Circular for 2018-19, the CPI forecast is between 3% and 6% and municipalities are required to justify all revenue increases in excess of the projected inflation target for 2018-19 in their budget. The residential rates rebate has been reduced from the present 14% to 12%. Effectively the rates increase will be 8.4% and not 6.4%, which is above the target set and needs to be justified.
ý How does the municipality plan to address the R124-million shortfall from the proposed budget? This can only be done by reducing the operating budget and/or from a massive increase in rates. Over the last number of years the ratepayers were confronted with draft budgets which are totally unrealistic and then are expected to make informed constructive comments – knowing full well that this is a draft budget which will be re-worked to balance income and expenditure. Why not table a draft budget, which is realistic and then ask for public comment? To comment any further on this draft budget is futile but the NRF will, as in the past, engage with the municipality once the draft budget has been re-worked.
A further reminder, according to Ndlambe’s Budget Policy, council shall endeavour to keep the labour component cost as a percentage of operational expenditure below 35% (currently >45%) and that a zero- based budget shall be prepared on a need-based analysis in the preparation of the Operating Budget.