The City of Johannesburg 2017/18 downward budget adjustment was passed at the last council sitting, barring approval by the African National Congress (ANC).
Both the capital and operational expenditure budgets, which ensure new municipal projects like roads and clinics and municipal salaries, were adjusted downwards by R1,3 billion and R459,1 million, respectively.
Also read: A look at Joburg’s major budget adjustments
Executive Mayor Herman Mashaba assured residents, however, that essential service delivery will remain intact. He explained the adjustment, saying that when the City first started ramping up its spending in the 2010/11 financial year, it was based on the assumption that the investment would increase in line with the City’s ability to generate cash-backed surpluses over a sustained period of time.
“This decision was supported by National Treasury which promised to increase capital grants to the City, should it demonstrate an ability to spend the level of budget envisaged.
“Unfortunately, both the City and National Treasury did not meet these assumptions made more than five years ago. This led to a borrowing spree averaging R3 billion per annum over the past five years, which has led to money owed in total loans and bonds expanding to R20 billion.
“This is compounded by the City’s R170 billion infrastructure backlog; a conservatively estimated 300 000 housing backlog; residents residing in more than 180 informal settlements; and close to R17 billion in corruption and maladministration being uncovered.”
But the ANC’s Geoffrey Makhubo, the shadow MMC for Finance, is not convinced. He told council on 22 February that he believes the reason for the downward adjustment is because the City has run out of money.
In fact, the party has been publicly voicing its concern over the City’s financials numerous times in recent months.
“Tough times are ahead and I believed the projects that have been deferred in this [adjustment] budget will never come back. There simply is no money.”
Makhubo went on to say that the City’s finances are in trouble and that which is being raised through revenue is not sustainable, even with the R1,5 billion decrease.
He added that the report presented to council shows that R700 million was returned, and not spent. He said the City also did not spend the entire long-term loan it was given.
“The ability to spend will unlock future financing for the City.”
Makhubo made several recommendations as to how the report should be changed, encouraging that expenditure should be shown per source and per grant.
The African Independent Congress (AIC) and Patriotic Alliance (PA) also opted to vote against the approval of the report.
Despite this, with the vote from the Economic Freedom Fighters (EFF) and the Democratic Alliance’s (DA) coalition partners, the report was passed and is set to be implemented.
Also read:
A look at Joburg’s major budget adjustments
Highlights from the 2018 Budget Speech
CITY NEWS – Joburg Adjustment Budget 2017/18 [VIDEO]
