Adjustment budget raises some eyebrows
The Dr Beyers Naudé Local Municipality’s adjustment budget for the 2023/2024 financial year was tabled for consideration and approved after the ANC, CSA, and EFF (13 votes) voted in favour of it at a special council meeting on Thursday 29 February. The DA and FF+ (11 votes) voted against the approval and requested the adjustment budget to be referred back to the municipal management for reconsideration.
Assumption
According to DA Councillor Ewald Loock, the DA's objection to the approval of the adjustment budget is based on several factors. The first factor is the assumption that revenue for service charges will increase by
R63 022 885,50m over the next financial year. The original budget for revenue relating to service charges that the municipality expected to receive was R247 822 074m.
The amount for revenue relating to service charges in the adjustment budget is
R310 844 959,50m. “The assumption that the revenue side of the budget relating to service charges will increase by about R63m cannot be accepted, simply because the cash receipts over the last six months, as reported in the Section 52 report of December last year, do not reflect this increase,” explains
Loock. “In short, the additional budget amount for service charges will not be available in cash over the next six months.”
The total amount for revenue in the adjustment budget is R609 116 917,86m. This is an increase of R81 108 767,86m from the R528 008 150m of the original budget. The amount budgeted for revenue includes service charges, property rates, rent of facilities and equipment, interest earned from external investments and outstanding debtors, income from agency services, grants and subsidies received (operating and capital), fines, licences and permits, other revenue, and internal recoveries.
Chriszanne Janse van Vuuren
Operating budget
Another factor raised by the DA is the R17 301 318m deficit in the operating budget in terms of the original budget, which already puts enormous pressure on the municipality's cash flow.
The adjustment budget increases this deficit by R18 930 759,49m to a deficit of R36 232 077,49m. “Apart from the fact that a deficit cannot be budgeted for, the cash shortage will only get bigger,” says Loock. “It can therefore be expected that the pressure on the municipality's cashflow will increase, and this will have an increased adverse impact on service delivery.”
Employee costs
The fact that the adjustment budget makes provision for a R7 822m increase in employee costs – from R184 072m to
R191 893m – was also raised as a concerning factor. “The DA considers this increase in staff costs as a blank cheque to hire staff,” says Loock. “The recent appointment into the position of 'driver for the mayor' is an example of an appointment into a position that cannot be considered critical.”
According to him an undertaking was made when the organogram was adopted in August last year that appointments from outside the municipality will only be made where the position can be considered critical.
This appointment was made in disregard to the undertaking, he says. “The DA also considers the way in which labour is utilised at present to be ineffective. Further increases in staff or increases in salaries will only increase inefficiency,” he says. He adds that the absence of control over municipal personnel is considered a critical issue that is 'seriously harming service delivery'.
In addition to the above factors, the adjustment budget makes provision for a 70% (R6m) increase in the amount payable to the appointed security company to safeguard the municipality's assets. Loock says it is concerning that vandalism persists despite the R9m that is paid for security services at present.
“Instead of increasing amounts payable to service providers, the DA would like to see any increase in income that may possibly be achieved to be budgeted in a way that will reduce the shortfall in the budget so that the enormous R555m debts to Eskom can be addressed,” Loock concludes.
A request for comment was submitted to the DBNLM and their reply will be published as soon as it is received.