28 March 2018
Full Council Decisions
EThekwini Municipality’s draft budget for the 2018/19 financial year was tabled at a Full Council meeting today, 28 March before going out for public comment and consultation.
EThekwini Mayor Zandile Gumede tabled the budget for public consultation which will be conducted over the next two months. Budget consultations with standing committees, businesses and the public along with other stakeholders are scheduled for April and May.
The detailed schedule will be communicated to the public over the coming weeks.
The final budget will be approved on 31 May 2018 with the final Service Delivery and Budget Implementation Plan approval by the Mayor in June.
The 2018/19 financial year’s Medium Term budget, which was approved by Council, is a consolidated budget of R45.8 billion which has been developed with an overall planning framework and includes programmes and projects to achieve the City’s strategic objectives.
The tabled report states that despite increasingly challenging circumstances, service delivery will continue to be sustained through this budget by reprioritising expenditure to ensure that key objectives are achieved.
The operating budget, which funds the continued provision of services provided by the Municipality, has increased from R37.2 billion in the 2017/18 financial year to R38.7 billion in the 2018/19 financial year, R41.7 billion in the 2019/20 financial year and R45.2 billion in the 2020/21 financial year respectively.
The growth of the operating budget is mainly due to repairs and maintenance of infrastructure, cost of addressing service delivery backlogs, cost of bulk purchases namely water and electricity, impact of capital spending on operating expenditure and employee related costs as a result of filling vacancies and provision for salary increases.
Capital expenditure is budgeted to rise to R7 billion in the 2018/19 financial year, and thereafter to R7.7 billion by 2020/21. R17.3 billion (approximately 79 percent) is allocated to meeting infrastructure and household service needs and backlogs over the medium term. R2.2 billion of this is directed to new housing developments and interim servicing of informal settlements. The capital budget continues to reflect consistent efforts to address backlogs in basic services and the renewal of infrastructure of existing networks.
Tabling the budget, Mayor Gumede said the budget is set against a backdrop of slow economic growth where tough choices had to be made to achieve the development outcome for the City.
“The budget has been developed to contribute to the Municipality achieving the strategic objectives of the Integrated Development Plan.
The 2018/19 Medium Term Revenue and Expenditure Framework is informed by the Municipality’s long-term financial strategy with emphasis on affordability and long-term sustainability. Honourable Speaker, I therefore table this budget in the year of President Nelson Mandela which is the year of further job creation and unity. We look forward to a positive economy that will benefit the poor,” said Mayor Gumede.
In a presentation to the Executive Committee at a special meeting held before the Full Council meeting today, Deputy City Manager for Finance Krish Kumar outlined local economy constraints, impact and challenges of the budget.
These include the high unemployment rate in the City, huge backlogs and further demands due to the impact of rapid urbanisation and the growth rates base being one percent while there is a negative growth in real terms on water and electricity income among others.
He outlined the City’s interventions in response to these challenges. These include facilitating catalytic projects which will attract over R100 billion in private and public sector investment, tourism, tourism promotion to attract more than 5.5 million visitors with a total direct spend of R12 billion and events with a direct spend of more than R900 million.
Furthermore, the Radical Agrarian Programme will support emerging farmers, while the establishment of Team Durban will consolidate Durban as a prime destination for local and international investments. Additionally, the City will be supporting priority sectors through the Sector Development Programme, facilitating Town Economic Development projects as well as the business fairs which includes regional fairs and Small, Medium and Micro-sized Enterprises (SMMEs) in support of Radical Economic Transformation.
Kumar also outlined proposed tariff increases. This includes electricity with a proposed tariff of 6.84 percent for the 2018/19 financial year.
This is compared to Eskom’s tariff increase of 7.32 percent.
Water tariff increase is proposed at 15 percent for domestic and 15.5 percent for business. However, said Kumar, uMgeni Water would be reviewing their tariff increase and as a result the City would also review the proposed tariff increase.
Refuse removal tariff increase is proposed at 9.9 percent, sanitation at 9.9 percent and rates (average) of 6.9 percent.
The above increases in tariffs reflect an appropriate balance between the interests of poor households, other customers while ensuring the financial sustainability of the Municipality.
The following are general contributory factors for the increase in levels of rates and service charges and includes:
• The cost of bulk purchases,
• Cost of the social package to indigent residents,
• Provision for the filling of critical vacancies,
• Salary increase with effect from 1 July 2018,
• Increased maintenance of network and infrastructure,
• The impact of capital spend on the operating budget and,
• The rollout of infrastructure and the provision of basic services.
Regarding rates, Kumar said pensioners, child-headed households, disability grantees and the medically boarded are exempt from paying rates on the first R460 000 of their property value. Residential properties valued up to R230 000 will be exempt from paying rates. All other properties valued above R230 000, the first R120 000 of rates will be charged.
Regarding pensioners property value – the maximum limit of R4 million provided that for those properties above R2 million, the monthly income from a pensions fund/SASSA does not exceed R7 000 per annum.
Kumar also touched on job creation and skills development including the use of 1 389 plumbing contractors on a rotational basis to undertake water related services. Additional plumbers would be employed to improve the turnaround time.
He said there are 1 500 caretakers employed at ablution facilities with a further 50 to be employed this year while 366 community based contractor are employing 1 770 people for refuse removal services. There are also 13 graduate engineers employed under the water mentorship programme while 753 people are employed by Durban Solid Waste utilising the Extended Public Works Programme (EPWP) grant.
He said the estimated work in EPWP to be achieved in the 2018/19 financial year is 23 484.
Regarding youth development initiatives, approximately R107.8 million will be provided for programmes that will benefit the youth. These include social ills campaigns, a ‘We Are Responsible Young People campaign, youth training, an exchange programme with sister cities and a back to school campaign. Four Mayoral imbizos are planned as well as a Mayoral Cup to promote sports across the wards in the City, a
Mayoral Youth Sponsorship and a Scarce Skills Summit and Youth in Business Summit are also budgeted for.
Poverty alleviations programmes include 73 soup kitchens, which has increased by 18, which feeds an average of 520 people per day per site. The budget provision for the 2018/19 financial year is R82.1 million increasing from R75.4 million in the 2017/18 financial year.
The total agricultural budget is currently R30.6 million but is expected to increase once feasibility and planning for the Agripark is completed.
The budget provision for vulnerable groups to create an enabling environment for all to be able to participate in Council activities is R10.5 million for the 2018/19 financial year and a further R11.5 million for the Dial-a-Ride service which is a transport system for the disabled.
Resolutions agreed upon at the Executive Committee meeting included that procurement plans must be approved and supply chain management processes are completed by the end of May. It was also agreed upon that the budget process would be monitored and finally that achievements from the 2017/18 financial year’s budget will be outlined and submitted to each of the support committees and be included in the submissions made to committees.
Issued by the eThekwini Municipality’s Head of Communications Tozi Mthethwa.
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