Treasury flags political instability, vacancies, ‘over-optimistic’ revenue target

THE unstable political environment in Nelson Mandela Bay could spill over into the city’s administration while vacancies in top management because of suspensions remain a major problem hampering the municipality.

This was the warning city manager Johann Mettler received from the national Treasury last month.

The Treasury has also raised concerns about what it deemed an overly optimistic revenue collection target of 95% upon which the 2018-19 budget is premised.

This, as the municipality’s average revenue collection rate was at 92% in April.

The Treasury’s observations of the city’s draft budget were a bone of contention with some opposition councillors at Wednesday’s council meeting.

The draft budget was not passed and the council has until June 30 to do so or face the possibility of being placed under administration.

In the letter dated May 4, the Treasury’s local government budget analysis director, Bernard Mokgabodi, wrote: “The budget is not sustainable over the medium term revenue and expenditure framework due to the shortfall calculated on the cash-back reserves based on national Treasury’s assumptions.”

Mokgabodi, however, said the budget was well-aligned to the integrated development plan, the built environment performance plan and the Municipal Financial Management Act.

Mokgabodi recommended that the municipality improve its relations with the provincial government.

Mettler said he had not met with officials from Treasury since the warning to find ways to remedy the challenges.

Other observations made by the Treasury were that library services and human settlements, which are not the core competencies, were straining the city’s coffers.

This is further compounded by the decision to insource private security.

Budget and treasury political head Retief Odendaal said he did not agree with Mokgabodi’s assessment of the budget.

Odendaal said the municipality’s under-collection was a direct result of the punitive tariffs placed on water charges due to the drought.

He said a special budget and treasury meeting set for June 22 would deal with the problem as residents were struggling to pay their bills.

Odendaal said the ambitious targets were deliberate.

“In any business you don’t budget for mediocrity – you try and have targets in place which are stretched for your officials to try and meet.

“We believe what we have is realistic,” Odendaal said.

He did not agree that hiring the contract security officers was costing the city more.