A double digit increase in income will be needed in the next financial year to ensure that Overstrand Municipality stays financially viable, but that will go hand in hand with a major effort to increase efficiency.
This is the gist of the draft budget for 2013/2014 presented to Overstrand Municipal Advisory Forum last Wednesday evening, 3 April 2013, by Cllr Ben Solomon, Mayoral Committee Member for Finance and Economic Development, and the Director of Finance, Mr Henk Kleinloog.
The proposed revenue budget amounts to R748 million (an increase of 13.75 per cent), the expenditure budget to R829 million (an increase of 9.26 per cent) and a budget for capital projects of R104 million (a decrease of 37.5 percent. The difference between the revenue and expenditure budgets of R81,2 million is the result of technical provisions for depreciation and other items that do not affect the municipality’s cash position. The actual cash surplus amounts to R8 million.
The overall impact of tariff increases on household bills has been kept below 10 per cent and for indigent households less that 5 percent. A new rate has been introduced for undeveloped land. The rates increase for commercial land and improvements is 10,12 percent and for residential property 6,94 percent. The reason for these increases is to accommodate increased expenditure, the higher cost of the indigent policy and to raise money for capital projects in the following financial year in the form of thesurplus of R8 million.
According to Cllr Solomon the most contentious issue apart from the increases in rates in the budget, is that from the new financial year only the indigent will receive the 6 kl of free water. Other consumers will now have to pay R3.50 per kl for that. This is in line with the statement of the Minister of Finance in this year’s Parliamentary Budget Speech that free water was never intended for everybody.
The basic monthly charge in respect of electricity will increases by 22 %. Consumption cost increases will vary between 3 % and 9 % ( with an average of 5.27 %).
He said that cleaning contracts and other projects to the value of R3 million that was partially funded by the Extended Public Works Programme will have to be carried fully by the municipality in the new financial year because the EPWP funds must be used on new projects.
Cllr Solomon described the 2013/2014 Draft Budget as the most difficult one of his seven years in Council. He pointed out constraints such as the maintenance of municipal buildings and infrastructure, the ageing of the vehicle fleet and wages and salaries.
Due to capital spend the maintenance of the municipal assets are increasing at a much higher rate than the inflation rate.
Cllr Solomon also said that the staff component increased by only 92 posts to a total of 1032 from 2006 to 2012, a growth of only 12 per cent over the period of 6 years or 2 per cent per year. Amongst others, staff were added to the departments of Environmental Management Services (from 1 to 12), Law Enforcement (from 9 – 18), Fire and Emergency Services (from 3 – 12) and Finance (from 87 – 114).
With regard to capital projects he said no surplus funds are available and the municipality have reached its prudent borrowing limit.
Since 2006 more than R1,04 billion was spent by the Municipality on infrastructure, mainly on the development of water sources and for the treatment of drinking and waste water (R451 million), the upgrading of electricity feeder and substations and networks (R209 million) and roads (R127 million).
Cllr Solomon added that the Western Cape government has invested about R4million over the same period in the area in the form of the improved hospital and clinics, new and upgraded schools, and major road projects on the R43, the Hemel en Aarde Valley and the link between Gansbaai and Elim.
The draft budget for 2013/2014, indicative budget forecasts for 2014/2015 and 2015/2016 as well as draft budget related policies are available for public scrutiny at municipal offices, libraries and on the municipal website www.overstrand. gov.za. Closing date for representations and comments on the proposals is 30 April 2013.