The Newcastle Municipality, alongside 12 other municipalities, has come under scrutiny from the KwaZulu-Natal Treasury regarding the decision to adopt unfunded budgets for the 2024/2025 financial year.
This follows KZN Finance MEC, Francois Rodgers, requesting that 13 municipalities within the province reconsider their decision to adopt unfunded budgets for the period.
If you are not familiar, an unfunded budget, as defined by the National Treasury of South Africa, occurs when a municipality’s planned expenditure exceeds its realistically anticipated revenue and available cash reserves, breaching the financial sustainability principles of the Municipal Finance Management Act (MFMA) (National Treasury, MFMA Circular No. 89, 2017).
Nevertheless, here is a list of the municipalities in question:
· Newcastle
· eMadlangeni (Utrecht)
· Endumeni (Dundee)
· uThukela
· uMzinyathi
· eDumbe
· Impendle
· Jozini
· Mpofana
· Okhahlamba
· Mthonjaneni
· Zululand
· Ulundi
“In letters to mayors of the above-mentioned municipalities, MEC Rodgers emphasised that Provincial Treasury will not be in a position to grant extra funding to municipalities who approved the expenditure of funds they do not have,” said KZN Treasury.
Additionally, the Department highlighted that MEC Rodgers reminded municipalities that Section 18 of the MFMA states that an annual budget of a municipality may only be funded from realistically anticipated revenue 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.
The department further highlighted that Regulation 22(1) of the Municipal Budget and Reporting Regulations of 2008 states that an adjustment budget of a municipality must be appropriately funded. The approval of unfunded budgets is therefore in contravention of Section 18 of the MFMA and Regulation 22(1) of the Municipal Budget and Reporting Regulations of 2008.
“The government of provincial unity will not tolerate poor financial governance as it threatens the state’s ability to provide much-needed services to communities. Municipalities must adhere to the legislation when approving budgets. Municipalities experiencing financial problems are urged to reduce non-essential expenditure and implement cost-containment measures.”
Additionally, MEC Rodgers further reminded the concerned municipalities that in terms of MFMA Circular No. 129, National Treasury will only allow municipalities to turn around from an unfunded budget position to a funded position within three years, of which in each year, there should be measurable progress in terms of the improvement in the collection rate and cost-containment initiatives.
As KZN Treasury focuses on unfunded budgets, what are your thoughts on all of this? Share your views in the comment section below.
Comments 10
Newcastle Municipality is in a mess. Seems like the IFP like the ANC came in with the “it’s our turn to eat” policy.
At last there is someone seeing this rotten core of our municipality. They must fire all the lazy no good workers and get people who are honest and know how to manage our municipality. All leaders of the different areas must also been sacked and replaced with other who do what they say they going to do. Hopefully the pipe problems will stop as well as leaking reservoirs a d dam gates that are not properly maintained. What happened to SANRAL that would have tackle our potholes. Mayne also not payed.
This is common practice and it makes a lot of sense. You can’t budget for something of which you don’t have funds for. It’s like living on overdraft or on credit. Municipality must practice financial control and curve the unnecessary expenditure.
Useless Municipality and IFP for Newcastle, they are closing water for the communities in order to use their trucks to invoice for supplying water, pure corruption on a day light, Mr Dube must go fast, he is corrupt to the core…pot holes all over Newcastle locations and nothing is happening hence we see people running after the IFP…this is disgusting….IFP is not competent….over 40 years living in Newcastle I have never experienced water problems….now IFP is running the Municipality suddenly there’s no water almost everyday, with no communication…I wish people could be arrested soon.
It’d make sense if they required this additional budget and there was any sign of them doing anything right.
Nothing works in Newcastle.
Traffic lights, roads are trash, systems are a joke.
Curious to know if all these other municipalities are managed by the same party….🤔
Nonetheless….we’ll keep getting taxed.
We intend to spend and do spend millions on building a university, an airport and a sporting complex. Whilst we are about it why don’t we consider a high speed train service.
The tradgedy is our is our roads are danderous to drive on and the town is filthy.
This seems like a setback for future developments. Not in shame but we can’t be having leaders running Newcastle to the dusts.
On a positive side though,I think the stipulated 3 years to make return can be used for a good course. Aren’t auditors not hyper aware of what’s going on?
Also, occupants should start exercising their right to raising concerns that’s if they don’t.
As a student who is passionate about community development at large ,I have no hope. But,let’s see how things will turn out in the next 3 years.
Newcastle roads are very bad what were they doing with that money because pothole are closed with sand water crisis and electricity crisis
Municipality must stop having strategic meetings at Vulintaba. Who is paying for all the expenses? We are. Use the money to fix up the potholes
Budget for a deficit and you in trouble……. well one has to guess that Newcastle will become a junk town as this council believes the open cast mining will lift the town….. that is a pipe dream in the making….. look at the CBD road where they allow coal truck from outside of town go through the town, the roads are virtually non existent of decent tar….. so with more coal trucks it will be gravel and horrendous. They also believe these mines will bring employment, obvious not one councilor and municipal official has read the mine proposition 156 jobs !!!! Well hello how is that is going to help. This Council and municipality is useless, one has to wonder if any of them actually knows what is happening, apart from those nifty salaries. All these so called look what we doing is a sick joke.
Rogers needs to take action not lip service. Rogers needs TO STOP THIS MINING NONSENSE AND THIS USELESS UNIVERSITY STORY so that those nifty salary’s for councils and officials can rise, to be paid for by cash strapped ratepayers to pay.
FIX THE TOWN AND NO MORE CAPITAL EXPENDITURE, WE CAN’T AFFORD IT! R2 BILLION IN DEBT THIS TOWN IS BANKRUPT.