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The Newcastle Municipality has officially submitted the Final Medium Term Budget for 2022/2023.
With big plans in the works from the municipality, you can expect to fork out more for services.
During the mayoral report, Cllr Xolani Dube explained one could not lose sight of the financial plight that the municipality was currently facing.
He stressed that it was essential to use this budget not only as a reflection of the true financial state of the government entity. But also as an opportunity to implement programs for a better future. He noted that the 2022/23 budget was still unfunded. However, once available, will accompany the Budget Funding Plan which the Municipal Manager and his team would implement.
According to the government entity, this will ensure the longevity of the council’s budget for the future.
Furthermore, Cllr Dube claimed he has achieved his responsibility of ensuring public and stakeholder engagements on the draft budget.
“Most of the issues raised are already covered in the budget that I table before you. We have however made sure that those issues that are not covered in the current budget have been consolidated in the IDP as part of our future planning,” Cllr Dube added.
According to the mayor, the response received from the roadshows has given him and the municipal council a reason to work harder every day. “Through these roadshows, we have also extended our collaboration with other government sector departments in order to bring many services closer to our people.”
But, what does the Final Medium Term Budget have in store for the town of Newcastle and its residents?
“The operating revenue is projected at R2.6 billion, of which R 1.1 billion will be from government grants. The bulk of our revenue is still generated from rates and services, which is about 58% of our total revenue. After engaging with the CFO and the assessment by the Provincial Treasury, I am also confident that the tariffs increases proposed in the budget are well within the required norm, given the current inflation rate,” stated the Newcastle Mayor.
The operating budget is projected at R3 billion, which will be spent as follows:
- R601 million for employee costs.
- R29 million is for councillors’ remuneration.
- R286 million is for debt impairment.
- R363 million will be allocated for depreciation.
- R35 million is for finance charges.
- R605 million allocated for electricity purchases.
- R153 million is for water and material purchases.
- R818 million will be earmarked for contracted services and R118 million is for other general expenses.
Adding to this, Cllr Dube said that on the capital budget, the municipality has set aside a total of R209 million to acquire new infrastructure and equipment.
“This particularly includes roads, water and sanitation infrastructure. We have also put aside an amount of R5.1 million for the purchase of plant and equipment, as the current state where this municipality hires plant to execute a number of projects is undesirable.”
- R59.9 million is expected to go towards roads and stormwater.
- R97.6 million towards water infrastructure and R27million towards sanitation infrastructure.
- A further R3 million for the upgrade of the airport and R2.2 million towards the refurbishment of buildings.
Cllr Dube also stated that approximately 91% of the capital budget will be funded from government grants, a practice which will continue until the budget is funded.
Additionally, Cllr Dube declared that in total, he tabled before the council, a total budget of R3.2 billion for approval.
“As mentioned above, the budget of the municipality remains unfunded, however, the Acting Municipal Manager and his team has assured me that, with the adoption and the implementation of the funding plan, the municipality is moving towards a funded position next year.”Furthermore, electricity tariffs are expected to increase by 7.47%. According to the Medium Term Budget, this tariff increase is as per the NERSA guidelines on municipal tariff increases. This will see electricity revenue increase by around R25.4 million (3.5%) in the 2022/23 financial year.
Cognisance should also be taken that this percentage increase of 7.47% is slightly above the inflation rate of 5.7%. However, as stated above, is based on the NERSAs tariff approval for municipal tariffs.
- Water tariffs are expected to increase by 6% in the 2022/23 financial year. The increase of 6% in tariffs is expected to generate an additional R12.8 million (6.9%). This takes it from R187.0 million generated in the current year to R 199.9 million in the 2022/23 financial year. The revenue figure of R199.9 million is net of the cost of free basic services of R10.1 million in respect of water as required in terms of the Budget and Reporting Regulations.
- Refuse removal tariffs are expected to increase by 6% in the 2022/23 financial year. The increase of 6% in tariffs is expected to result in an increase in revenue of R2.2 million (2.2%), from R99.0 million in the current year to R101.2 million in the 2022/23 financial year. This is primarily due to the substantial increase in the indigent benefit.
- Sanitation tariffs are expected to increase by 6% in the 2022/23 financial year. The increase of 6% is expected to generate an additional income of R3.8 million (3.2%). This takes it from R120.0 million in the current year to R123.8 million in the 2022/23 financial year.
With this all swirling around in your head, what are your thoughts?
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