Bay budget, IDP not ready for deadline

AS FINANCE gurus of the Nelson Mandela Bay Municipality are still refining the 2015-16 budget and integrated development plan (IDP) to reduce non-essential expenditure, the council will not adopt the two reports today, missing its end-of-May deadline.

However, the council will have to meet within seven days to consider and approve the budget, or apply for an extension from the Eastern Cape Department of Local Government for another seven days.

“We are busy working on it because the last budget showed a deficit and we will have to see where we can cut,” the city’s chief financial officer, Trevor Harper, said.

“The MFMA [Municipal Finance Management Act] stipulates we must adopt the budget by the end of May, but it also says if it’s not approved, council will have to sit every seven days until it is approved.

“As long as it’s approved before the start of the new financial year [on July 1]. Also, national Treasury needs to look at it,” Harper said.

Council speaker Maria Hermans said the budget would be dealt with today in compliance with the MFMA. She said it would be unrealistic to expect a new mayor appointed today to present a budget to the council.

Last month, the council approved the 2015-16 draft budget and IDP to undergo a public participation process before final adoption.

A number of issues were raised by opposition parties.

Treasury also urged the city to reduce non-essential expenditure or it faced the possibility of not getting its support.

It said the municipality’s prospects for financial sustainability over the next three financial years were strained.

The draft budget showed a deficit in the operating budget of more than R400-million, largely due to assets that either had to be written off or had reduced in value.

The municipality’s projection showed that it would only have enough cash reserves to cover its expenses for 1.1 months of the next financial year. That reduced to 0.9 months and 0.8 months in the two years that followed.

Treasury requires a municipality to have financial reserves to cover expenses for three months.