Council tables nearly R1 billion operational budget

 

Consumers in the Makhado municipal area can expect a 6,4% increase in property rates and other service tariffs, while electricity rates will go up by 1,88% as from 1 July this year.

This is according to the Makhado Municipality’s 2017/18 budget, tabled during Mayor Shonisani Sinyosi’s state-of-the-municipality and budget speech on 2 June. During her speech, Sinyosi mainly focussed on issues of service delivery in regard of the municipality’s capital budget, totalling R163 758 000, with little being said about the municipality’s operational budget and how the municipality is going to pay for everything. The municipality supplied the Zoutpansberger with a copy of the operational budget this week.

Budget in Brief

The municipality’s operational budget totals R919 450 000 for the 2017/18 financial year, of which R841 501 000 will go towards operational expenditure, leaving the municipality with a R77 949 000 surplus.

Expected Operational Revenue

The biggest contribution toward the operational budget revenue for the 2017/18 financial year will come from the sale of electricity, with a projected turnover of R317 429 000. The second-biggest contribution (R300 109 000) will come from operational transfers, while the income derived from property rates comes in third, totalling R55 915 000. A further R55 176 000 will come from “agency services”, although the budget does not specify what these services are. Other revenue includes “other revenue” (R30 587 000), interest on outstanding debtors (R13 726 000), licenses and permits (R12 567 000), service charges – refuse removal (R10 021 000), interest earned on external investments (R5 331 000), fines, penalties and forfeits (R1 889 000) and rent (R502 000). The above-mentioned excludes a further amount of R116 196 000, which is reflected as revenue from capital transfer (national, provincial and district).

Key items of Operational Expenditure

With an overall increment of 7,36% as guided by the National Treasury, wages and salaries will again eat up the largest piece of the revenue cake, totalling R282 794 000. This excludes the R25 958 000 to go towards the remuneration of councillors. The second-biggest expense will be bulk purchases (mainly electricity) totalling R212 748 000, while “other expenditure” comes in at third place, totalling R190 408 000. During the 2017/18 financial year, the municipality also foresees writing off an amount of R95 872 000 due to depreciation and asset impairment, while R12 720 000 will go towards finance charges. An amount of R11 million will be spent on contracted services, while R10 million is allocated for debt impairment.

Capital Budget

As mentioned, the municipality’s capital budget totals R163 758 000. The biggest chunk of this amount will go towards labour-intensive projects, mainly roads and transport (R88 890 000). These projects were highlighted in last week’s edition of the Zoutpansberger. A further R9 802 000 will be spent on planning and development, bringing the total to R98 691 000 for economic and environmental services. The second-biggest piece of the pie will go towards upgrading trading services, mainly the municipality’s electrical infrastructure. For this, an amount of R58 336 000 was allocated. This includes the amount the municipality plans to spend on upgrading Louis Trichardt’s main electrical substation from 44MVA to 66MVA. Smaller amounts were also allocated to finance and administration (R4 350 000) and community and social services (R2 380 000). Of the R163 758 000 needed to fund all their capital projects, the municipality aims to generate R49 368 000 in own revenue. The rest (R114 390 000) will be funded from grants from the national government.

Summary of Grants

By far the biggest source of revenue for the municipality will again be grant allocations, totalling R416 305 000 for the 2017/18 financial year. Without these allocation, the municipality would not have been able to function.

The equitable share grant tops the log with an amount of R294 079 000. Second in line is the municipal infrastructure grant (MIG) to the amount of R91 196 000, while the Integrated National Electrification Programme Grant will put a further R25 million in the municipality’s pocket. Smaller grants include the Demarcation Transition Grant (R2 282 000) and the Local Government Financial Management Grant (R1,7 million).  

 

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Date:17 June 2017 - By: Andries van Zyl

Andries van Zyl

Andries joined the Zoutpansberger and Limpopo Mirror in April 1993 as a darkroom assistant. Within a couple of months he moved over to the production side of the newspaper and eventually doubled as a reporter. In 1995 he left the newspaper group and travelled overseas for a couple of months. In 1996, Andries rejoined the Zoutpansberger as a reporter. In August 2002, he was appointed as News Editor of the Zoutpansberger, a position he holds until today.

Email: andries@zoutnet.co.za

 

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