ETHEKWINI Municipality’s draft budget for the 2018/19 financial year was tabled at a full meeting of council meeting on 28 March before being released for public comment and consultation.
Budget consultations with standing committees, businesses and the public along with other stakeholders are scheduled for April and May, with a detailed schedule to be communicated to the public over coming weeks.
The final budget will be approved on 31 May with the final Service Delivery and Budget Implementation Plan approval by the Mayor in June.
The 2018/19 financial year’s Medium Term budget, which was approved by Council, is a consolidated budget of R45.8 billion which has been developed with an overall planning framework and includes programmes and projects to achieve the City’s strategic objectives.
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The tabled report claims that despite increasingly challenging circumstances, service delivery will continue to be sustained by reprioritising expenditure to ensure that key objectives are achieved.
The operating budget, which funds the continued provision of services provided by the Municipality, shows an increase from R37.2 billion in the 2017/18 financial year to R38.7 billion in the 2018/19 financial year, R41.7 billion in the 2019/20 financial year and R45.2 billion in the 2020/21 financial year respectively. This growth in the budget is due to repairs and maintenance of infrastructure, cost of addressing service delivery backlogs, cost of bulk purchases namely water and electricity, impact of capital spending on operating expenditure and employee related costs as a result of filling vacancies and provision for salary increases.
Capital expenditure is budgeted to rise to R7 billion in the 2018/19 financial year, and thereafter to R7.7 billion by 2020/21. A total of R17.3 billion (approximately 79 per cent) is allocated to meeting infrastructure and household service needs and backlogs over the medium term. R2.2 billion of this is directed to new housing developments and interim servicing of informal settlements. The capital budget reflects efforts to address backlogs in basic services and the renewal of infrastructure of existing networks.
Tabling the budget, Mayor Zandile Gumede said the budget was set against a backdrop of slow economic growth where tough choices had to be made to achieve the development outcome for the City.
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In a presentation to the Executive Committee at a special meeting held before the council meeting, Deputy City Manager for Finance, Krish Kumar outlined local economy constraints, impact and challenges of the budget. These included the high unemployment rate in the City, huge backlogs and further demands due to the impact of rapid urbanisation and the growth rates base being one percent while there was a negative growth in real terms on water and electricity income among others.
He outlined the City’s interventions in response to these challenges. These include facilitating catalytic projects which would attract over R100 billion in private and public sector investment, tourism, tourism promotion to attract more than 5.5 million visitors with a total direct spend of R12 billion and events with a direct spend of more than R900 million.
Tariff increases:
Kumar outlined the proposed tariff increases. This includeds electricity with a proposed tariff of 6.84 percent for the 2018/19 financial year. This is compared to Eskom’s tariff increase of 7.32 per cent. Water tariff increase is proposed at 15 per cent for domestic and 15.5 per cent for business. However, he said uMgeni Water would be reviewing their tariff increase and as a result the City would also review the proposed increase in its tariff.
Refuse removal tariff increase is proposed at 9.9 per cent, sanitation at 9.9 per cent and rates (average) of 6.9 per cent.
Regarding rates, Kumar said pensioners, child-headed households, disability grantees and the medically boarded were exempt from paying rates on the first R460 000 of their property value. Residential properties valued up to R230 000 would be exempt from paying rates. All other properties valued above R230 000, the first R120 000 of rates will be charged.
Regarding pensioners property value, the maximum limit of R4 million has been proposed, provided that for those properties above R2 million, the monthly income from a pensions fund/SASSA does not exceed R7 000 per annum.
Kumar also touched on job creation and skills development including the use of 1 389 plumbing contractors on a rotational basis to undertake water related services.
Regarding youth development initiatives, approximately R107.8 million will be provided for programmes that will benefit the youth.
Poverty alleviation programmes include 73 soup kitchens, which have increased by 18, and feed an average of 520 people per day per site.
The budget provision for the 2018/19 financial year is R82.1 million increasing from R75.4 million in the 2017/18 financial year.
The budget provision for vulnerable groups to create an enabling environment for all to be able to participate in council activities is R10.5 million for the 2018/19 financial year and a further R11.5 million for the Dial-a-Ride service which is a transport system for the disabled.
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