The Newcastle Municipality is once again under the spotlight, following a parliamentary question submitted to the KwaZulu-Natal Treasury about its allegedly unfunded budget — a development that comes despite the Municipality’s continued insistence that its finances are in order.
This comes after KwaZulu-Natal Finance MEC Francois Rodgers named 13 municipalities, including Newcastle, for adopting budgets that, according to the province, don’t have the financial backing required to meet spending commitments.
As previously reported by Newcastillian News on 7 April 2025 (click here to read more), MEC Rodgers stated that the provincial unity government would no longer tolerate poor financial governance, especially when it affects service delivery to residents. He stressed that municipalities must cut non-essential spending and follow proper legislative procedures when approving their budgets.
But what does it actually mean to have an “unfunded budget”? According to the National Treasury of South Africa, it’s when a municipality’s planned expenses exceed its anticipated income and available cash reserves — a violation of the Municipal Finance Management Act (MFMA) (National Treasury, MFMA Circular No. 89, 2017).
Yet, in response to media inquiries, the Newcastle Municipality remained firm.
As previously detailed in Newcastillian News on 9 April 2025 (click here to read more), the Municipality’s Communications Unit said it had tabled a funded draft budget in March 2025, and planned to table a fully funded final budget in May 2025. The Municipality also referenced ongoing implementation of cost containment measures and use of its IFC (Integrated Financial Control) processes to stabilise finances.
However, tensions escalated during the Newcastle Municipality’s IDP Roadshow on 5 May 2025, where the Municipality’s Chief Financial Officer (CFO) publicly denied that Newcastle had ever tabled an unfunded budget. She insisted the budget had a projected R37 million surplus, and alongside Speaker Cllr Thengi Zulu, blamed the media for spreading false and misleading information.
This contradiction prompted Dr Imran Keeka to submit a parliamentary question, seeking official clarity from KZN Treasury on the matter. In his submission, Dr Keeka stated:
“At the Newcastle IDP Roadshow on 5 May 2025, the CFO of the Newcastle Municipality was insistent that they did not submit an unfunded budget to Treasury. She went on to explain that their budget had a projected surplus of R37 million. She, together with the Speaker of the Municipality (Cllr Thengi Zulu), blamed the media for essentially peddling false and fake news.”
He further noted:
“Essentially, they have discredited the MEC and Treasury’s assessment of their budget on a public platform. This iteration of the CFO’s view was subsequently repeated by others who presented and who suggested that such false information was disseminated by politicians for their own nefarious purposes. Such defamation of the Treasury process and the dignity of the MEC cannot be without consequence, given what may have been their own error.”
So, what did Treasury say?
In its official reply, KZN Treasury confirmed that the Newcastle Municipality did table its 2025/2026 Annual Budget to Council on 28 March 2025, in line with the MFMA’s Section 16(2). Treasury then analysed the Municipality’s data — including the Schedule A documents and TABB (Tabled Budget) data string submitted via the National Treasury’s GoMuni Upload Portal — and made a sobering finding: the Municipality’s budget was unfunded by R28.6 million.
This finding was shared with the Mayor, Speaker, Municipal Manager, and CFO on 16 April 2025, and followed up with a formal meeting between Treasury and the Municipality on 8 May 2025. During this meeting, Treasury outlined its findings and discussed the necessary corrective measures. While the Municipality acknowledged the issues and committed to resolving them, both the Municipal Manager and CFO were absent, citing their involvement in the Municipality’s 2025/2026 IDP Budget and PMS public consultation process.
Following this, Treasury noted that a revised TABB data string was uploaded by the Municipality on 16 May 2025, in an effort to address the funding shortfall. A preliminary pre-assessment based on the revised data found that the 2025/2026 Annual Budget now “appeared to be funded” — a significant shift.
However, on 21 May 2025, Treasury communicated these early findings to the Municipality but stressed that this was not a final determination. As stated:
“The Provincial Treasury reserves its right to amend this preliminary assessment when we undertake our final assessment. The final assessment will be performed, based on the approval of the 2025/2026 Annual Budget ORGB data strings and the related documents, and formal feedback will be provided to the Municipality accordingly.”
In response to Dr Keeka’s follow-up question on whether a revised, funded budget had been officially tabled, Treasury explained that the Municipality had verbally indicated, on 20 May 2025, that they intended to table the budget on 22 May 2025. A final review would only occur once the approved ORGB data and associated documentation were submitted to both National and Provincial Treasury.
Regarding the public comments made by the CFO and Speaker at the IDP Roadshow, Treasury confirmed that:
“Correspondence will be sent to the Chief Financial Officer and Speaker to capacitate them on the understanding of an unfunded budget.”
This move signals a more educational approach, aiming to avoid further miscommunication and ensure municipal leaders are fully aligned with legislative definitions and processes before addressing the media and making bold claims.
So, where does this leave things?
In short, Newcastle did initially table a budget that Treasury found to be unfunded. After revisions and engagements, the situation appears to have improved — but the final verdict is still pending. What remains clear is that Treasury is taking this seriously, and that municipal officials will be held to a much higher standard moving forward.
This entire episode underscores the importance of financial transparency, responsible communication, and internal consistency within local government — particularly when considering that public funds and service delivery are on the line.
What are your thoughts on this back-and-forth? Share your views in the comments below.
