MAYOR ADDRESSES IMPENDING SHORTFALL ON THE BUDGET
During a virtual council meeting held on Wednesday, 26 May 2021, in Hermanus’ banqueting hall, Executive Mayor Dudley Coetzee delivered the following address regarding the approval of unforeseen and unavoidable expenditure, for which no provision was made in the 2020/2021 Budget of the Overstrand Municipality.
This was as a result of an increased demand for electricity leading to a shortfall on the budget in this regard.
The following are excerpts from Mayor Coetzee’s speech, explaining the decision:
The impact of the Covid-19 pandemic had far reaching consequences for the country, resulting in an economic, health, and humanitarian crisis.
The negative impact of the temporary closure of businesses, and the reduced consumption of water & electricity was considered by the Budget Steering Committee in April 2020.
The monthly review of revenue and expenditure at the end of April 2021 indicated that the revenue and expenditure relating to electricity is on the increase. This can be attributed to increased household occupancy due to an increase of non-permanent residents and a change in the way that business is conducted, such as working from home.
This has resulted in an increased demand for services such as electricity which gave rise to a shortfall in the budget for the purchase of electricity. It is imperative to render this services and thus additional budget funding, is required to partly service the Eskom accounts for the month of June 2021. This increased bulk purchase of electricity will be fully offset by increased electricity sales revenue.
The projected impact is an additional budget requirement for bulk electricity purchases amounting to R32m.
The projected additional revenue amounts to R47m.
This additional expenditure of R32m is above the total allowable limit, which is capped at R15m in terms of the framework for unforeseen and unavoidable expenditure in terms of section 72(c) of the Municipal Budgeting and Reporting Regulations.
The balance of R17m will be funded from projected savings identified across all directorates in the form of salary savings of R12m, interest on external loan repayments of R2,5m and savings generated in the Finance directorate amounting to R2,5m.
Mayor Coetzee said he will also provide the information to the Provincial Ministers of Finance and of Local Government, Environmental Affairs and Development Planning.
