Municipality cuts budget to the bone

Mayor, Makhosini Nkosi said during the presentation of the 17/18 Budget: "this too shall pass."

NEWCASTLE CBD – Bang for your buck or money mismanaged?

At a special council meeting on Wednesday, March 29. Mayor, Makhosini Nkosi laid facts bare with the presentation of the State of the Town Address and 2017/2018 Budget Speech.

This meeting was open to the public.

Cllr Nkosi explained the budget he presented was still in its first draft, and invited input and recommendations from all stakeholders towards the second draft and final budget.

Budget roadshows will also kick off soon.

Residents can expect an increase of seven per cent in property rates, water, sanitation and refuse removal, and a marginal electricity increase of 1.8 per cent.

The electricity increase is regulated by the National Energy Regulator (NERSA).

The billion-Rand Operational Budget (R1 816 269 996) is expected to be generated mostly by municipal rates and consumer payments, and bolstered by grants, subsidies,

fines, debtor interest and sundry revenue.

Cllr Nkosi stated projected revenue collection rates were based on realistic trends.

The municipality has committed to cleaning up its indigent register – families who earn less than R3 500 as a household qualify for indigent status.

“We have cut to the bone to the extent that councillors ask how they can secure services without the money. We are operating with a serious deficit.”

Aware of the vast leadership the municipality’s financial situation required, Cllr Nkosi said it could not afford to increase taxes or turn to borrowing, without drastic cuts on spending.

Major expenses projected for the new budgetary term include:

R494-million for bulk electricity purchases

R66.7-million to uThukela Water for bulk water supply

R15-million to Department of Water Affairs

R3-million for Charlestown water purchases, supplied from Volksrust in Mpumalanga.

R514.7-million has been set aside for employee costs, with R30-million earmarked for overtime in respect of essential services.

“We must get staff working overtime to clean up our town. We plead with the community that ‘this too shall pass’.”

An amount of R16-million will be spent on critical positions, with an additional R3.8-million projected for the vacant Strategic Executive Director posts.

Only R45.1-million was set aside for infrastructure maintenance.

“Cllr [Koos] Vorster raised this matter in council, to say this amount is not enough and we agree. While we understand this provision is far less than the norm of eight per cent of the total budget, this was provided on basis of availability, as the budget is income-based.”

Other projected expenditures include:

R92-million for indigent subsidies, with the free water subsidy halved from 12- to six kilolitres per household per month

R128-million appropriated in terms of general expenditure.

R5.7-million earmarked for collection fees, from close to R30-million in the previous year

R22.2-million for contracted services

R47-million for interest on loans

R23.3-million for remuneration of councillors

R247.8-million and R93.4 for debt impairment and depreciation respectively

In terms of the Capital Budget, a sum of R234 127 702 has been funded mainly by allocations or grants from national and provincial governance, and some internal funds.

“No external loans will be taken by the municipality to fund the capital programme.”

The Capital Budget is divided as such:

Roads infrastructure – R89 113 702

Water and sanitation – R120 589 000

Electricity roll-out – R9 000 000

Extension of the Newcastle Library – R5 425 000

Construction of a new library in Charlestown – R10 000 000

“It is exciting that the community of Charlestown is going to have a fully-fledged library. This goes a long way to show our Government is serious about the education of our communities.”

Bruce Douglas

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