Budget could kill municipal services

Allocations leave local authorities severely underfunded – experts

IT is highly unlikely that municipalities across the country will be able provide basic services in the near future due to the latest budget allocations made by the national Treasury. This is according to the South African Local Government Association (Salga) following the medium-term budget policy statement.

In the budget presented by Finance Minister Malusi Gigaba in parliament last week‚ Treasury’s contribution to local government in equitable share and conditional grants is projected to grow from 9.1% of the total budget in the 2018-19 financial year to 9.3% in the 2020-21 financial year.

Equitable share will increase from R62.7billion to R75.7-billion in the same period‚ while conditional grants will surge from R46.4-billion to R53.3-billion.

Nelson Mandela Bay budget and treasury political head Retief Odendaal said the future contributions were not sufficient.

“Just in the Bay alone, there are the billions of rands in infrastructure maintenance and refurbishment as well as the backlog in new infrastructure to be built.

“It is very clear that local government is underfunded,” Retief said.

“This has also resulted in municipalities often having to look at their ratepayers and consumers to make up the shortfall, which results in high tariff increases.

“In the foreseeable future, many municipalities are going to face bankruptcy and many municipalities will not be able to fulfil their mandate due to a shortage of funds,” he said.

The executive director of municipal finances at Salga‚ Simphiwe Dzengwa, said the small budget had a direct negative impact on the delivery of basic services.

“Local government is the most underfunded sphere despite all the challenges and the responsibilities it carries,” he said.

“There is no real growth in the equitable share. What you see is just an inflation adjustment.

“This is further complicated by the fact that the levels of unemployment in the country are very high.

“With the economy not growing‚ many people cannot afford to pay for municipal services‚ yet they demand more from municipalities.

“Local government cannot even collect what it is meant to collect because of the current economic climate.

“The latest figures show R128-billion debt‚ which is money owed by businesses‚ households and all who use municipal services.

“The bulk of this is from households who cannot afford to pay.”

Dzengwa said there needed to be a review of the funding allocated to local government from the fiscus.

South African Cities Network programme manager Danga Mughogho said although statistics showed 70% of the country’s population lived in urban areas‚ only 10% of the budget was allocated to local government.

“This may suggest a misallocation of priorities. One has to look at the allocation in terms of the mandates of the different spheres of government.”

‘ Many cannot afford to pay for municipal services