City juggles budget
As expected, the City of uMhlathuze’s 2009/10 Adjustments Budget has aggressively addressed its stressed financial situation.
Curbs on spending and chasing after outstanding monies head the priorities.
Reporting to a Special Executive Committee meeting on Wednesday, City Mayor Zakhele Mnqayi said ‘it is no secret that this municipality has recently fallen upon some hard times’.
‘However, I am confident that we will recover; we have accepted the severity of our financial situation and numerous changes have been instituted. ‘Apart from the major intervention of delaying major capital projects until source of funding is secured, many smaller savings have been put in place in respect of the operating budget,’ said Cllr Mnqayi.
He stressed that it was vital to maintain standards and service levels. ‘While we are focused on the goals of eliminating debt and ensuring a sustainable revenue stream, we cannot shy away from our core responsibility - improving the lives of the most disadvantaged among us.’
Cllr Mnqayi said payment for services was the most important factor in ensuring a sustainable debt level.
Progress
Whereas the 2009/10 Mid-Year Budget Review anticipated a revenue shortfall of R144.5-million, this has decreased to R116-million, largely as a result of major expenditure cuts by each department.
The original projected budget revenue of R1.287-billion has been adjusted to R1.183-billion, the main reasons for the decrease being:
• Anticipated land sales not realising - R72-million
• Reduction in interest on investments - R14.5-million
• Decrease in budgeted revenue for traffic fines - R5-million.
The effect of the recession also saw Council’s collection rate fall from 98.74% in December 2008 to 97.96% in December 2009.
At the same time, projected expenditure increased from R1.287-billion to R1.299-billion, an increase of over R12-million.
This is largely attributed to unbudgeted electricity purchases due to Eskom tariff increases (R48m) and WSSA water services increase (R9m).
Actions
The Executive Summary described the way forward as ‘extremely difficult’.
However, actions were prescribed around three components:
• The City Development Department has been tasked with expediting some R284-million worth of land sale tenders. To date, R54-million has been received.
• Deferral of capital expenditure of R194-million. Previously, a cut of R223-million was proposed but many projects had already been committed.
• Ensuring that future budgets are robust enough to obviate a similar financial crisis in the future.
