Budget speech sees proposed R2.494 billion for expenditure
The State of the Town Address and Budget Speech is an annual event, which see ratepayers waiting with bated breath to see what the financial year holds for them.
With high hopes for the 2018/2019 financial year, Newcastle Mayor Makhosini Nkosi delivered his second concept budget on Wednesday night, April 4.
“It is my pleasure to table a total budgeted expenditure of R2.494 billion, comprising of R2.274 billion for operational and R220.5 million for capital projects. The operational budget of R2.274 billion is made up of a cash component of R1,499 billion cash expenditure and R775 million non-cash expenditure,” stated Cllr Nkosi.
The capital budget will be spent as follows:
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Cash expenditure items
- Bulk purchases – R618.7 million
- Employee costs – R537.1 million
- Interest on loans – R43.9million
- Contracted service – R33.8 million
- Remuneration of councillors – R24.1 million
- General expenses R166.7 million
- Repairs and maintenance R70.6 million
- Materials – R3.7 million
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Non-Cash Expenditure Items
- Depreciation – R525.5 million
- Debt impairment R163.9 million
- Indigent benefit – R85.7 million
Capital Expenditure
Operating budget of R220.5 million will be spent as follows:
- Roads infrastructure – R 97.7 million
- Water and sanitation – R 85.5 million
- Construction of libraries – R 19.4 million
- Rural electrification – R 15.0 million
- Plant, furniture and equipment – R2.5 million
Funding the budget
To fund the operating expenditure, the budget appropriates the funding of revenue of R1.835 million. This will be made up of the following revenue services:
- Electricity – R692.8 million
- Water – R178.8 million
- Sanitation – R118.2 million
- Refuse – R95.5 million
- Property rates – R311.9 million
- Government grants – R368.8 million
- Other revenue – R68.9 million
Furthermore, to generate this revenue, Cllr Nkosi proposed the tariffs to be increased as follows:
- Electricity – 8%
- Property rates – 7.2%
- Water – 7.2%
- Sanitation – 7.2%
- Refuse – 7.2%
- Other – 10%
“While we acknowledge these tariffs are slightly above the projected inflation rate, the increases are necessary for the municipality to provide minimum level of service delivery. It is also necessary for the municipality to intensify its collection efforts to further improve service delivery.”
Furthermore, capital expenditure amounting to R220.5 million will be funded out as follows:
- Government grants – R177.4 million
- Own revenue (internal) – R43.1 million
“We are all equally concerned about the trend of shrinking government finances, against a fast-growing unemployment rate. The fact that national government is continually reducing its grant allocation to municipalities, while poverty escalates is a setback,” Cllr Nkosi emphasises.
He believes this is made worse with shrinking revenue, the down scaling and financial challenges faced by key industries within Newcastle, and the culture of non-payment of services.
“South Africa, as a country, is currently experiencing tough economic challenges, which increasingly compels us as Municipalities to depend on our financial resources. Only those municipalities who endeavour to strategically and proactively manage their sustainability will survive. We are on a mission to be one such municipality.”
According to Cllr Nkosi, the Newcastle Municipality has started developing and implementing strategies for financial sustainability. These strategies will focus mainly on curtailment and containment of expenditure.
“In other words, we are working hard on improving revenue collection with a view to run a financially sustainable municipality. This process is being done in consultation with ward councillors and affected consumers.”
Admitting that preparing the proposed budget for the 2018/2019 financial year was not an easy task, Cllr Nkosi has high hopes for the upcoming year.
“When we assumed office, we committed ourselves to good governance. To that end we have improved and updated policies and bylaws, that will enable us as municipality to achieve our objectives. We are now in the process of setting up structures to ensure effective implementation of the by-laws. We have also approved a new organisational structure that will be gradually phased in, and necessary alignment be done. In line with our austerity measures we have drastically reduced the overtime budget allocation. We believe with proper supervision; our staff can do much more during ordinary working hours.
Water Provision
Following the recent rainfalls, Cllr Nkosi said it was hard to imagine that Newcastle was experiencing water shortages. “Unfortunately, water provision is not about water falling from the sky, getting into pipes, and eventually coming out of taps,” he said.
As infrastructure is key in water provision and reticulation, Cllr Nkosi explained the municipality was fighting an ongoing battle to ensure residents had access to water. “Our problem with ageing and rotting infrastructure persists, and it still will for some time to come.”
While the municipality was working on the damaged infrastructure, Cllr Nkosi said water reticulation was a serious issue in Ward 23 and Ward 19. While claiming there were improvements, Cllr Nkosi admitted the problem was not yet solved.
For the upcoming year, the following water provision projects will be attended to:
- Water Conservation and Water Demand Management (WCDM) Madadeni – R6 500 000
- Madadeni Waste Water Treatment Plant (WWTP) – R20 000 000
- Upgrade of Ngagane Water Treatment Works (WTW) Phase 1 – R20 000 000
- Blaauwbosch bulk water project – R18 000 000
- Pipe replacement and upgrade Project – R11 156 000
- Ngagane Bulk Water Supply Project – R400 000
- WCDM oSizweni – R10 000 000
- Newcastle East Water Extension – R35 000
Community Services
Under community services, the project of refurbishing and extending the Newcastle Library is still ongoing. The project is currently at 72 per cent completion stage. The upgraded facility will boast a large study and computer area. These areas will be more isolated, allowing less disturbance for students.
The increased main library will allow for disabled residents to gain easier access to the library materials. “Overall, the extensions will create a more user-friendly environment for library users. We acknowledge the challenges that have been experienced in this project, but it is not always how you start but how you finish,” Cllr Nkosi emphasised.
Cllr Nkosi said he needed to highlight that drafting this budget was not an easy exercise and required exceptional expertise, hard work, and dedication. “It required open minds and progressive thinking. It is for that reason I would like to thank all the councillors, in particular the ANC caucus, the Municipal Manager and all his Management team for working tirelessly to ensure the responsibility is accomplished. This is a draft budget and subject to review. It will soon be presented and discussed with key Stakeholders and Treasurer as well as the community in general,” concluded Cllr Nkosi.
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