TSANTSABANE MUNICIPALITY Budget Preparation & Transparency
The budget preparation process in TSANTSABANE MUNICIPALITY follows strict guidelines ensuring transparency, accountability, and community involvement. It aligns with constitutional mandates, municipal priorities, and sector plans, emphasizing the importance of prioritizing basic community needs.
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Presentation Transcript
TSANTSABANE MUNICIPALITY DRAFT BUDGET 2020 / 2021
AGENDA Opening & Welcome Budget Presentation Questions Word of thanks
BUDGET PREPARATION The budget needs to be prepared in terms of chapter 4 of the MFMA & guidelines as provided by NT. A municipality may only incur expenditure in terms of an approved budget & within the limits of the amounts appropriated for the different votes The council must for each financial year approve an annual budget for the municipality before the start of the financial year.
TRANSPARENT BUDGET PARTICIPATION OPEN BUDGET TRANSPARENCY ACCOUNTABILITY
PLANNING & BUDGET PROCESS What is involved in the Budget Process: Align budget with: Constitutional mandate delivery of basic services Municipal priorities expressed in the IDP National & provincial priorities Sector department plans Community & Stakeholder consultation on IDP & draft budget Consultation with bulk electricity & water suppliers if applicable
BUDGET FRAMEWORK & FORMAT What is a Municipal Budget? A budget is a plan to get resources (planned revenue), & to use those resources (planned expenditure) to meet the objectives of the municipality. The budget must: prioritise communities basic needs; be funded; be sustainable; be realistic
BUDGET FRAMEWORK & FORMAT Budget must Prioritise Communities Basic Needs: Section 153 of the Constitution Developmental duties of municipalities A municipality must structure & manage its administration & budgeting & planning processes to give priority to the basic needs of the community, & to promote the social & economic development of the community, and Participate in national & provincial development programmes Ensure spending is aligned to the priorities of the IDP; Prevent & eliminate non-priority spending
BUDGET FRAMEWORK & FORMAT Operating and Capital Budget: Municipal Budget Capital Budget Operating Budget Revenue Expenditure Based on realistically anticipated revenue accruing to the municipality during its financial year Reflects expenditure on capital assets prioritized in the IDP in the current budget year and the two outer years and shows the sources of finance for these assets Allocates operating expenditure according to the different votes in the budget
BUDGET FRAMEWORK & FORMAT Budget must be Sustainable: Adequate cash coverage Municipality should have enough cash to pay suppliers; Sustainable revenue management proper billing & collection; fair rates & taxes that cover the cost to provide services; fair & well-managed indigents policy (assistance to the poor); Ensure receipt of grant funding as per DoRA allocation Renewal and maintenance of existing assets to preserve current income generating capacity; Budgets must be used for municipal assigned functions generating surplus to fund backlogs or improve efficiency in expenditure A budget must be funded. You cannot spend money you do not have
BUDGET FRAMEWORK & FORMAT Funding of the Budget: Sources of funding for the operating budget: Own revenue: Rates and taxes Service charges Transfers Equitable share National and provincial grants Borrowing (only for capital infrastructure) Public contributions and donations
BUDGET FRAMEWORK & FORMAT Grants as a Source of Funding: Grants are approved by gazetting in DORA and provincial gazettes Only include gazetted amounts in the budget, no promises Equitable share this is unconditional funds that are included in municipality own pool of funds Conditional grants must be used for a specific purpose specified in the conditions e.g. municipal infrastructure grant Non compliance or under spending may result in municipality having to return funds to the National Revenue Fund
BUDGET FRAMEWORK & FORMAT Funded Budget: National Treasury determined two key compliance requirements which relate to funding the budget and producing a credible budget. Funding the Budget Section 18(1) of the MFMA states that an annual budget may only be funded from; Realistically anticipated revenues to be collected; Cash backed accumulated funds from previous years surpluses not committed for other purposes; and Borrowed funds, but only for the capital budget referred to in section17.
BUDGET FRAMEWORK & FORMAT Credible Budget: Funds only activities consistent with the IDP Is achievable in terms of service delivery & performance targets Contains revenue & expenditure forecasts consistent with current & past performance Does not jeopardize the financial viability of the municipality Ensures that the financial position is maintained
BUDGET CHALLENGES Major Challenges: Cash flow problems Municipality unable to pay its creditors within 30 days Ineffective conventional meter reading books Inability to collect all revenue and revenue for services rendered No effective cost containment strategy and policy not yet adopted to the operations Contract management with no monitoring of performance, penalty clauses for poor services/performance. Discovered credibility concern with the valuation that could led the budget into a unfunded position. (See adjusted budget figure for property rates)
PROPERTY RATES There was a substantial increase in the number of properties and property value since the last General Valuation Roll.
PROPERTY RATES ORIGINAL BUDGET 2019/20 ADJUSTMENT BUDGET 2019/20 DRAFT BUDGET 2020/21 Reason for decrease Property value errors significant Property Rates 80 000 000 0 62 109 000 Correction with Supp Val Roll
Service charge: sewer and refuse An increase of 5,03% for sewerage and 6,62% for Refuse RESIDENTIAL DESCRIPTION 2018/19 2019/20 2020/21 INCREASE % SEWER 246,89 283,9 298,19 14,29 5,03% REFUSE 156,17 164,3 175,17 10,87 6,62% BUSINESS DESCRIPTION 2018/19 2019/20 2020/21 INCREASE % SEWER 616,48 708,95 746,6 37,65 5,31% REFUSE 451,91 475,4 503,39 27,99 5,89% NB: The tariffs excludes vat
CATEGORIES REFUSE&SEWER General increase of 5,03% for sewerage and 6,62% for refuse Per household Per additional living unit Refuse removal free 4 times per month ,Free sewerage To qualify for indigence: Combined household income less than or equal to 2x monthly government pension Registration takes place annually Can come in at any time to office to register, renew annually
Water An increase of 4,50% Approved 2018/2019 Approved 2019/2020 Propose 2020/2021 Rand value increase Description Charges % 17,89 361,35 397,50 415,39 4,50% Residential - basic 0,66 13,39 14,75 15,41 4,50% Residential - consumption 0 - 6kl 0,77 15,55 17,10 17,87 4,50% 6.1 - 12kl 0,90 18,25 20,10 21,00 4,50% 13kl - 30kl 1,23 24,93 27,40 28,63 4,50% More than 30kl Hospitals, Old Age Homes Schools and Hostels 0,55 11,20 12,30 12,85 4,50% 0,64 12,89 14,20 14,84 4,50% Departmental Use
Electricity ( NERSA GUIDELNE 6,24% ) Rand value Propose 2020/2021 % Tariff blocks Approved 2018/19 Approved 2019/2020 increase 4,65 Block 1 (0-50 kWh) 91,43 103,38 108,03 4,50% 5,91 Block 2 (51-350 kWh) 116,07 131,24 137,15 4,50% 7,97 Block 3 (351-600 kWh) 156,68 177,16 185,13 4,50% 9,90 Block 4 (> 600 kWh) 194,56 219,98 229,88 4,50% 15,06 Basic charge p/month 295,94 334,61 349,67 4,50%
2020/21 Budget Summary Revenue Budget Year 2020/21 Budget Year +1 2021/22 Budget Year +2 2022/23 R thousand Revenue By Source Property rates Service charges - electricity revenue Service charges - water revenue Service charges - sanitation revenue Service charges - refuse revenue Rental of facilities and equipment Interest earned - external investments Fines, penalties and forfeits Licences and permits Agency services Transfers and subsidies Other revenue Gains on disposal of PPE Total Revenue (excluding capital transfers and contributions) 52,529 2,746 7,104 248,093 62,109 61,879 21,511 22,793 14,873 593 724 662 569 57,058 2,872 7,431 263,330 64,966 64,725 22,501 24,799 16,312 620 757 692 596 63,423 3,004 7,773 279,184 67,955 67,703 23,536 25,940 17,063 649 792 724 623
2020/2021 Budget Summary Expenditure Budget Year 2020/21 Budget Year +1 2021/22 Budget Year +2 2022/23 R thousand Expenditure By Type Employee related costs Remuneration of councillors Debt impairment Depreciation & asset impairment Finance charges Bulk purchases Other materials Contracted services Transfers and subsidies Other expenditure Loss on disposal of PPE Total Expenditure 17,892 247,546 88,408 5,807 31,350 18,682 2,471 64,109 2,749 16,079 18,715 260,434 93,933 6,116 32,792 19,541 2,585 67,058 2,875 16,819 19,576 274,065 99,804 6,498 34,301 20,440 2,704 70,142 3,007 17,593
CAPITAL BUDGET Project water resevoir Boichoko Electrificatio of Greenfield Total Grant funding Project Smart metering Project tools of trade and printing 2.1 - Parks sport and recreation 2.2 - solid waste 2.3 - traffic 2.4 - social development 2.5 - Library services 2.5 - office of the Director community own 2.6 - public safety municipal property eletricity infrastructure(renewal) fund MIG INEP 2021 2022 2023 14,229,720 1,800,000 16,029,720 8,652,000 533,333 165,000 531,000 320,000 320,000 15,131,240 3,000,000 18,131,240 8,652,000 6,276,000 8,949,924 35,733,164 15,791,800 5,576,000 21,367,800 8,652,000 583,528 180,529 580,976 350,117 350,117 235,235 510,952 6,564,696 9,361,621 39,381,421 fund Donation fund own own own own own own 2,021 2,022 2,023 2,021 2,022 557,866 172,590 5,230 555,426 334,720 334,720 2,023 5,000 5,471 - - own own own 215,000 467,000 6,000,000 8,556,333 33,238,053 224,890 488,482 total capital funding
Revenue Vs Expenditure 2020/21 Medium Term Revenue & Expenditure Framework Description Budget Year 2020/21 Budget Year +1 2021/22 Budget Year +2 2022/23 R thousand Total Revenue (excluding capital transfers and contributions) Total Expenditure 248,093 263,330 279,184 247,546 260,434 274,065 Surplus/(Deficit) 546 2,896 5,120
REVENUE ENHANCEMENT Sale of land to improve cashflow at the municipality Improved service delivery Less reliance on Sedibeng Water by using own boreholes & drilling new Solar lighting / panels with assistance from solar plants in the area Smart pre-paid metering both for water and electricity to be installed Funding for prepaid electricity/Settlement with funding/grant/bailout of VETA capital investment.
PROPOSE POLICY CHANGES Credit control & Debt collection sec12 &13 Policy is silent on the type of measure against councilor not having arrangement in place over 90days debt. Similar to official who don t make arrangement against arrears even thou current is deducted monthly. Propose changes Incentive to make old debt arrangement Selling of land prohibited to municipal official or office bearer/spouse or proxy whose municipal services account is in arrears for than 90days in line Municipal System Act 32 of 2000 Schedule 2 par 10. Leaving employment: Leave and bonus payout will be firstly allocated to arrears debt as per requirement/principles set out in line Municipal System Act 32 of 2000 Schedule 2 par 10.
PROPOSE POLICY CHANGES continue . Illegal consumption of municipal services section 8.4 Penalty charge of R100 000.00 for illegal consumption/connection in addition to the cost the removal of all the materials use in the illegal connection Propose change the council to consider the recoverability if the penalty charge and its enforcement.
PROPOSE POLICY CHANGES Draft Cost Containment Policy. Highlights documented within the Policy TRAVEL AND SUBSISTENCE Consider traveling with municipal fleet Budget requirement to purchase future administrative vehicles. No travel and subsistence allowance will be paid for employees and non-employees attending interviews. Sharing of the mode of transport. Only economy class tickets to be purchased for employees and Councilors', where the flying time of the flight is five (5) hours or less. Domestic hotel accommodation linked to travel and subsistence may not exceed R1 500 per night per person (including dinner, breakfast and parking)
PROPOSE POLICY CHANGES Draft Cost Containment Policy. Highlights documented within the Policy OVERTIME The Director must ensure that overtime worked in excess of 40 hours, is authorised by the Municipal Manager prior to the actual overtime being worked, as this is in contravention of Section 10 of the Basic Conditions of Employment Act (BCEA). The core working hours of the employees to be changed to a shift system, where applicable, to obviate the need for overtime (e.g. Night watchers section) A work plan to reduce overtime should be submitted quarterly
PROPOSE POLICY CHANGES Draft Cost Containment Policy. Highlights documented within the Policy ENGAGEMENT OF CONSULTANTS Accounting Officers must only contract with consultants after a gap analysis report has confirmed that the municipality does not have the requisite skills or resources in its permanent employment to perform the services required Ensure that contracts for consultants include retention and penalty clauses of 15% for poor performance and in this regard against the above specification, accounting officers must invoke such clauses, where deemed necessary Travel and subsistence costs for the appointment of consultants must be in accordance with the travel policy of government and the contract price specifies all travel & subsistence costs.
