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KZN News │ Newcastillian News
Home Local News

Newcastle Municipality loses its equitable share funding

Quinton Boucher by Quinton Boucher
11 Jan 2023
in Local News, Municipal
Reading Time: 4 mins read
2
Welcome to Newcastle KZN Entrance

Unfortunately for local residents, Newcastle Municipality was not paid its equitable share by the National Treasury.

The Constitution provides that each sphere of government – national, provincial and local – is entitled to an equitable share of revenue raised nationally to enable it to provide basic services and perform the functions allocated to it.

According to the Treasury, the equitable division of revenue takes into account the functions assigned to each sphere and the capacity of each government to pay for these functions through its own receipts and revenues.

Moreover, the equitable share is an unconditional allocation. Provincial and local governments, being distinct spheres of government, determine the priorities for these funds and are directly accountable for how they are spent. However, provincial and local government spending is largely assigned to functions in which national legislation sets norms and standards.

Discussing the matter, a local IFP councillor who wished to remain anonymous explained that the Municipality now finds itself in a difficult situation.

He explained that the equitable share was apparently valued at over R100 million.

By not obtaining the funding, he said, “It puts the municipality in a difficult position. Because the equitable share was not paid, the Municipality could not make the first payment to the employees who returned to work in October 2022.”

During a media briefing on 19 September 2022, Newcastle’s Mayor, Cllr Xolani Dube elaborated on how the Newcastle Municipality would be reinstating the 223 employees, the former administration had dismissed.

However, while the former employees found themselves set to return to work, the municipality would have to fork out a whopping R80 million to the employees. The first payment was due to be paid in December 2022.

To read more, click here.

According to the local councillor, the Municipality has now been using grant funding for operational expenditures.

Looking at the entire situation, the ANC Regional Spokesperson and former Deputy Mayor, Cllr Reuben Molelekoa said that the ANC was extremely disappointed.

“When the budget was initially dealt with, the Newcastle Municipality’s leadership was warned by CoGTA that as they (the Newcastle Municipality) had presented an unfunded budget, there was a chance that the Municipality would not be given the equitable share.”

Despite the warning, Molelekoa pointed out that the Municipality went ahead with its decision, allegedly not taking any guidance from the CoGTA.

“When the ANC had an unfunded budget, the party was still able to secure the equity share and this is because the ANC followed the advice laid out by CoGTA,” he added.

Moreover, Molelekoa pointed out that the Newcastle Municipality had attempted to obtain an overdraft from its bank.

“In October 2022, the IFP-led coalition said it wanted an overdraft, a decision which the ANC opposed. It could not request a loan, as CoGTA had already advised against it due to the municipality’s financial situation,” said Cllr Molelekoa.

The Municipality’s leadership allegedly went ahead and requested the overdraft and, according to Molelekoa, Nedbank denied the request.

Now facing further financial difficulties, Molelekoa stressed that it was unfortunate that the employees the Newcastle Municipality reinstated could not be paid.

In addition to this, the former Deputy Mayor pointed out that the Newcastle Municipality was looking at adjusting its current budget, which could see budget cuts of up to R50 million.

“The council is already struggling to fill potholes and a budget cut of up to R50 million will cause further strain. The Newcastle Municipality will then be in crisis and if the situation with the equitable share is not resolved timeously by the Acting CFO (Chief Financial Officer) and the Municipal Manager, the Municipality will potentially collapse,” emphasised Molelekoa.

This, according to the Councillor, will involve the Newcastle Municipality not being able to pay its staff or debts, which included Eskom.

With the Newcastle Municipality facing an uphill battle, Newcastillian News sent a media enquiry on the subject to both the Municipality’s Communications Unit and the Municipal Manager on Monday, 9 January 2023.

The deadline for the media enquiry was earmarked for 10 am on Wednesday, 11 January 2023. Despite the passing of the deadline and attempts to contact both the Communications Unit and Municipal Manager after the deadline had fallen away, the Newcastle Municipality remained silent on the matter.

This is a developing story and hopefully, the Newcastle Municipality will be able to provide residents with insight and the way forward soonest.

What is your take on all of this? Share your views in the comment section below.

Tags: COGTADismissedEmployeesFinancial constraintsLocal Government Equitable Share (LGES)National TreasuryNewcastle KZNNewcastle MunicipalityUnfunded Budget
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Comments 2

  1. Neil Sooknanan says:
    2 weeks ago

    Newcastle needs to be put under administration urgently. Other legal actions are going to follow. NRF submitted a comprehensive budget which could have saved this town , but it was never tabled.

    Reply
  2. Jakes says:
    2 weeks ago

    It does not make a difference to our community if no equitable funding received namely:
    1.These monies intended for fixing aging infracture is not carried out …our pmu is dysfunctional…
    2.Poverty alleviation projects always no monies in budget even when ANC ran council..monies were spent on road shows or sporting events
    3.Too many chiefs employed on high salaries not suitably qualified doing nothing…strange nothing is done no ones knows who is in charge when querries sent in …get rid of dead wood….there will be enough money to sustain council
    4.were is our rates.taxes.levies going to….as no potholes roads sewer being fixed….the traffic department budget needs to be cut…these traffic officers dont need car allowances buying expensive fancy cars…they can walk or ride a bicycle to points of roadblocks …manning robots

    Reply

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