THE Enoch Mgijima Local Municipality council adopted an adjusted budget for the 2016-17 financial year of R912.5-million, four months before the end of the financial year, during a special council meeting on Tuesday.
Executive mayor, Lindiwe Gunuza Nkwentsha requested council to give chief financial officer, Nomthandazo Ntshanga the power to present the adjustment budget on her behalf.
Nthsanga said R787.6-million was for the operating budget while R124.9-million had been set aside for the capital budget.
The R787.6-million operational revenue included known grants received for operational expenditure. Operational expenditure was funded from cash carried forward and operating revenues.
She said the capital budget was funded from the municipal infrastructure grant (MIG), internally generated funds, Integrated National Electrification Programme (Inep) and the Chris Hani District Municipality (CHDM). The capital expenditure was R101.1-million in the original budget adopted last August.
“The capital budget has been funded with R53.3-million from own funds, Inep grant of R5-million and rollovers for former Tsolwana and Lukhanji of R8.7-million,” Ntshanga said.
CHDM funding amounted to R4-million but allocation details were not specified. R53.9-million was from the MIG.
“In many cases revenue billed is much higher than cash received. An offsetting bad debt expense is also included for each billed revenue vote.”
The initial bad debt for electricity was R23.5-million, which had increased to R36.5-million after the adjustment, while bad debt on rates had escalated from R22.3-million to R31.8-million. The bad debt related to refuse collection had increased from R17.7-million to R23.2-million.
Provision for bad debt increased from R73-million to R91-million as a result of the negative cash collection for services. Ntshanga said this was consistent with the mid year budget assessment report where there was under collection “in all major services and rates”.
Property rates and refuse collection remained at 6% and electricity at 7.64% for Tsolwana.
In Nkwanca property rates and refuse collection stayed at 7.8% and electricity at 7.64%.
The former Lukhanji area had a property rates increase of 6.8%, electricity at 7.64% and refuse collection at 8%. The Equitable Share allocation from National Treasury remained at R167323.
“This amount includes the allocation made by National Treasury towards the remuneration of ward councillors and support for indigents.”
Ntshanga said the provincial cooperative governance and traditional affairs department had allocated R3-million for staff relocation and integration costs and preparation of Nkwanca’s annual financial statements.
“The restructuring grant increased from R20.143-million received from national government to R23.143-million. Included in the revised budget is an amount of R4-million received for the revitalisation of Tarkastad township under the small town revitalisation programme.”
The operational budget was reduced from R807.9-million to R787.6-million to have a balanced budget, as the original budget had a deficit.
Ntshanga said repairs and maintenance budget had been reduced from R45.7-million to R30.9-million.
“The reason for this is the low expenditure on repairs and maintenance. At December 31 only R5.4-million had been spent for the first six months. Provision of doubtful debts has increased from R73.8-million to R91.3-million. This is in line with poor revenue collection from property rates and major services.”
Legal expenses rocketed by R700000 as the municipality spent R1.1-million of the available R1.2-million within six months.
The accommodation and catering votes received additional funds.
“The original capital budget of R101.1-million has been increased to R124.9-million, largely due to the approval of the 2015/16 unspent own funds of R17.6-million.”
Indigent income levels were set at R1750 for destitute indigents and R2540 for indigents.
*See story page 10.