Mayor’s Newsletter: Written 19 April 2021
On 31 March 2021, the Municipality’s draft budget for 2021/22 to 2023/24 was tabled in Council. In an earlier newsletter, I commented on the structuring of electricity tariffs as they form an integral part of municipal budgets.
Over the past decade, high electricity tariff increases have dominated the basket of services provided by municipalities to the extent of limiting realistic tariff increases required for water, sewerage, refuse and property rates to make overall increases to residential and business customers affordable.
Municipalities are “price-takers” for increases granted to Eskom by Nersa for the bulk electricity purchases as well as nationally negotiated salary increases for municipal employees. These two expense categories comprise 50% (R1249m) of our Operational Expenditure budget of R2496m. Contracted services which include the operational expenditure on Housing projects and GIPTN amount to R599m (24%). The remaining expenditure of R648m covers all the other categories.
For the Operational Budget to balance, Revenue needs to exceed the Expenditure. The increases for Employee Related Costs and
Bulk Purchases, therefore, result in other tariffs being much lower to ensure that affordable tariffs are levied to our customers.
Core Services Revenue is budgeted at R1619m (or 62%) out of Total Revenue of R2628m with Grants Received amounting to R707m (27%). The balance comprises Sundry Revenue of R302m (11%) which includes bus fares of R86m. Electricity contributes R875m or 54% of our Core Services Revenue.
In summary, the administered prices have squeezed the flexibility in levying above inflation tariffs on other services that would realistically provide for sufficient funding for the refurbishment of water, sewerage, roads and storm water infrastructure. The poor management at Eskom has therefore resulted in pressures on municipalities who should have been spending more to maintain and upgrade infrastructure that has served us for the past 40-50 years. In the coming years, the next challenge will be to increase expenditure on maintenance and refurbishment.
We have already embarked on a programme of improving productivity in spending less in certain areas to make more money available for upgrades in infrastructure.
As active citizens we all need to be mindful of our environmental footprint to assist in ensuring that our spending is productive. The Clean George campaign that has recently been launched is targeted to spend approximately R1 000 000 per month employing temporary workers to clean up litter, get streets and verges clean, etc. While providing necessary employment in austere times, these funds could be spent more productively to provide greater value to our communities, e.g. facilitating economic activity. By using the available refuse collection channels and stopping littering, our citizens could therefore help in improving the services of the municipality.
We all need to work together.