Kouga Municipality’s draft budget for the new financial year was unanimously approved by Council.
Executive Mayor Elza van Lingen said the draft budget, as well as the draft Integrated Development Plan (IDP), would now be taken to communities for feedback so that both documents can be finalised in line with legislation and what Kouga’s people consider to be the priorities.
The draft IDP for the five-year period 2017/2022 was also approved by Council at the same meeting. The final documents will be tabled to Council for adoption before the end of May 2017 and implemented from 1 July 2017.
The draft Medium Term Revenue and Expenditure Framework (MTREF) for the period 2017/2018 to 2019/2020 is the first budget to be compiled by the new DA-led Council following the local government election of August last year.
“We faced some significant challenges in compiling the draft, including the higher costs of bulk water, fully implementing cost-containment measures, allocating sufficient funds for the rehabilitation and maintenance of infrastructure and achieving an acceptable cost coverage ratio,” the Mayor said.
“Funding also had to be set aside for our fleet replacement plan while additional money had to be budgeted for employee-related costs because of outstanding staff matters that were never concluded under the previous Council.”
Highlights of the draft budget are as follows.
The operating revenue for 2017/18 totals R 758 million. This is an increase of 18,55% compared to the 2016/17 Adjustments Budget.
The main revenue sources are electricity (32,29%), property rates (23,32%), operating grants and subsidies (15,07%), water (9,89%) and sanitation (6,58%).
The operating expenditure for 2017/18 totals R 811 million, resulting in a budget deficit of R 53,46-million. It is a 16,67% increased compared to the 2016/17 Adjustments Budget.
The main expenditure items are employee-related costs (31,55%) and bulk electricity purchases (23,07%) and depreciation (10,32%).
The significant increase in operating revenue and expenditure results mainly from new reporting requirements set by the Municipal Standard Chart of Accounts (MSCOA), to be implemented country-wide by municipalities from 1 July 2017.
PROPOSED TARIFF INCREASES
8% for property rates
9,5% for water
9% for sanitation
9% for refuse
6% for the Environmental Management Fee
An average of 1,88% for electricity, subject to approval by the National Electricity Regulator of South Africa (Nersa).
The draft capital budget for 2017/18 totals R 67 million, which is a slight decrease of 1,91% compared to the 2016/17 Adjustments Budget.
It will mainly be funded from government grants and subsidies, as the municipality has reached its prudent borrowing limits, and internal funding is limited.
Capital projects on the draft include almost R 12-million for new vehicles to boost service delivery and R 25 million to complete the upgrade of the Kruisfontein Waste Water Treatment Works at Humansdorp.
The Mayor stressed that both the budget and IDP were still in draft format and that changes could still be made to it.
“This is why we will be presenting the drafts to our communities during April and May so that their inputs can be taken into consideration when we finalise the documents.”