Still no word on the withholding of grants

Budget revised as city expects an additional R336m in revenue

While the Nelson Mandela Bay municipality stands to lose R500m in grants due to underspending, the metro has adjusted its operational budget due to a revenue boost of R336m but reduced its capital expenditure by R187m.

The 2023/2024 adjustment budget amounts to R18.7bn, comprising R16.9bn for the operating budget and R1.8bn for the capital budget.

The adjustment budget allows the municipality to move money from one department to another and incorporate grant funding.

Chief financial officer Selwyn Thys presented the adjustment budget at a mayoral committee meeting yesterday, with it to be debated at a council meeting today.

The revised budget factors in the reduction in the urban settlements development grant (USDG), informal settlements upgrading partnership grant (ISUPG) and Integrated Public Transport System grant.

This totals R226m with the grants reduced by the National Treasury in October. However, R42.5m from the USDG and ISUPG that were unspent in the 2022/2023 financial year were approved for rollovers.

Thys said the National Treasury had postponed a date when it would indicate a decision on withholding grants.

Treasury deputy directorgeneral responsible for intergovernment relations, Malijeng Ngqaleni, informed the city about the decision in a letter sent to city manager Noxolo Nqwazi on February 12.

It wants to stop the allocation of seven different funds to the city due to underperformance.

“We are still waiting for an outcome,” Thys said.

“But the budget tabled still includes those four grant allocations, so if there is any instruction that they will adjust them beyond the tabling of the budget, we will have to take the item back to council.”

The city stands to lose more than R500m in grant funding.

It spent less than 40% of its annual budget halfway through its financial year on December 31 last year.

Last week, it submitted a plan to the National Treasury on why it should get the money.

On the improved revenue, Thys said the major contributions came from electricity revenue, which was R12m more than indicated in the budget. However, water revenue was R30m less than budgeted for.

An increase had also been projected for interest earned from outstanding debtors, which sits at R306m.

“We have been busy with an extensive look at the accuracy of the water accounts sent to customers and in line with that we are expecting R30m less than the original budget.

“On the interest raised on outstanding accounts for the city, a large portion of the outstanding debt is water charges.”

According to his presentation, changes to department budgets include:

● Budget and treasury from R21.9m to R5.3m;

● Human settlements from R150.35m to R134.3m;

● Economic development, tourism and agriculture from R3m to R6.3m;

● Corporate services from R37.5m to R36.9m;

● Infrastructure and engineering from R612.2m to R514.4m;

● Water services from R466.8m to R467.2m;

● Sanitation from R142.2m to R141.9m;

● Electricity and energy from R315.8m to R304.4m;

● Safety and security from R60.9m to R36,4m; and

● Recreational and cultural services from R51.6m to R28m.

The public health department and Mandela Bay Development Agency were spared cuts, remaining at R79.2m and R54.4m, respectively.

The infrastructure and engineering department took the biggest knock, its allocation decreasing by R97.7m, followed by water services at R39m.

Deputy mayor Babalwa Lobishe said the city was underperforming in revenue collection.

“It’s like the functions do not exist, whether it’s generating money from permanents or fines from the traffic department,” Lobishe said.

Safety and security acting executive director Nilton Whiteboy said the department was looking for a new service provider for its traffic contravention system.