OMAF - WHAT TO EXPECT FROM THE 2021/22 DRAFT BUDGET

OMAF - WHAT TO EXPECT FROM THE 2021/22 DRAFT BUDGET

A well-attended Overstrand Municipal Advisory Forum (OMAF) meeting on Wednesday evening, 10 March.

2021, shared the preliminary draft budget for 2021/22, the adjustment budget for 2020/21 and a high-level feedback on the IDP delivery for the past three financial years (2017/18 – 2019/20).

The 4th and final review (2021/22) of the current 5-year Integrated Development Plan (IDP) is currently in process.

Kindly take note that the draft IDP review, as well as the draft budget for the financial year of 2021/22 will be open for public comment during April 2021. The documents will be available after it has served before Council at the end of March.

Overstrand Executive Mayor, Dudley Coetzee, presented the draft budget for 2021/22 and referred to the catastrophic effect Covid-19 and the lockdown has had on everybody. “The national lockdown introduced in March 2020 had a severe and immediate impact on the economy and all operations in the private and public sector, including the finances of municipalities has been affected by it – conditions are expected to remain volatile for the foreseeable future,” he said.

It is further projected that inflation for 2021 will reach 4% and increase to 4.5% during the next financial year.

With this gloomy picture in mind, electricity remains a binding constraint on economic recovery, with power interruptions expected to continue into 2021.

In addition, the National Energy Regulator (NERSA) indicated that electricity costs for municipalities from Eskom will increase with 15.6%. (This will be adjusted according to the final position regarding tariff increases, which will be published by NERSA).

Given the recent announcements around renewable energy, “we are currently talking to one or two renewable energy independent power producers who can generate their own electricity in the Overstrand to see if we can purchase electricity from them to reduce our dependence on Eskom,” the Mayor added.

He further states that the National Treasury also encouraged municipalities to maintain tariff increases at levels that reflects an appropriate balance between the affordability to consumers, particularly poorer households while ensuring the financial sustainability of the municipality.

“Against this background, the directive to the administration was to limit increases in tariffs of those services that we can control to 4% in the 2021/22 Draft Budget”.

4% Tariff Increase

• It is proposed to increase property rates across the board by 4%. The rebate on property rates offered to persons over the age of 60 remains unchanged.

• Calculating the sewerage charge for water borne sewerage on 70% of potable water consumed with a cap of 35 kl, remains the manner in which water borne sewerage charges are to be levied.

• The tariffs for refuse removal increase by 4% to cover the costs of the service.

• The tariff for sewerage services and water (including the 0 – 6kℓ of water), increase by 4% in this Draft Budget. This is still in line with the National Treasury directive that the level and structure of water tariffs are to be fully cost reflective. At present, the cost of providing water is around R25.19 per kℓ excluding VAT.

• Sundry tariffs mostly increase by 4%, except in specific instances where either 0% increase is proposed, or an increase related to actual cost recovery.

Salaries

The proposed increase in the salary budget is 4.5% and notch increases, which average 1.9% have also been budgeted for. “We are mindful of the fact that the Minister of Finance announced that public servants should only receive notch adjustments for the following three years.”

The Mayor continued by saying it should be noted that annual salary adjustments are still to be negotiated at National Bargaining Council level between the employer organisation (SALGA) and the respective unions. He confirmed that all staff vacancies are still frozen and may only be filled following a motivation to senior management.

He added that this draft budget projects an accounting loss of R113m. “Should we succeed in containing salary increases to notch adjustments only we will reduce our projected accounting deficit by R19.4m,” he said Mayor Coetzee concluded the evening by encouraging residents to download the documents, once available, in order to provide comments on the draft IDP and Budget related issues.