City softens tariff blow

2010-05-28 00:00

WHILE consumers may be reeling in the wake of proposed tariff increases now that Msunduzi Municipality’s draft budget has been completed, the municipality has actually managed to soften the blow by working in a total shortfall of R1,24 billion.

According to the draft budget, the following increases are likely:

• Water — eight percent.

• Electricity — 21%.

• Sewerage and refuse — eight percent.

• All services except economic and trading services

— eight percent.

Msunduzi administrator Johann Mettler said that technically, the municipality is not supposed to draft a budget with a deficit in mind because this goes against legislation.

However, he added, had it failed to work a deficit into the draft budget, it would have had to raise tariffs substantially and consumers would have been hit hard.

Said Mettler: “If we were to raise tariffs in order to balance out, we’d have to increase tariffs by 300% across the board instead of eight percent. That is completely unjust …”

Mettler said one of the problems with the current draft budget is that 63% of the R2 billion total expenditure is set aside for employee-related costs, and this cannot simply be changed suddenly.

This initial calculation excluded bulk water and electricity purchases, but a change in internal structure will result in a decrease that is likely to see the 63% share decline to around 33%.

Despite high employee-related costs, Mettler said, the overtime draft budget is 50% less than the amount spent in the previous year. The termination of temporary workers has helped contain costs, as paying these employees cost R9,24 million, he said.

Msunduzi Mayor Mike Tarr said problems with the valuation roll affected the municipality’s income, but consultants are looking into it.

He said the R1,24 billion deficit is “an extraordinary amount of money that we’ll have to claw back over three years” and the municipality will have to look at changing the salary bill at some stage as “it is double what the norm should be …”

The recommended rates randage is 0,0096 for residential properties, while other properties have a rates randage of 0,0169.

Agricultural properties and public service buildings will receive a rates rebate of 0,0144 in the rand, rural communal property will get a rates rebate of 0,0018, and hospitality properties will get a rebate of 0,0028.

Newly incorporated properties will be phased in over three years and a rebate of 50% will be given in the upcoming financial year.

Homeowners who are pensioners and whose total income does not exceed R2 696 a month will qualify for a 33,3% rebate, and those earning less than R2 160 a month qualify for a 40% rebate.

No property rates will be paid by homeowners living in properties valued at R150 000 or less.

The draft budget has seen a revision in the credit and debt collection policy.

For instance, the municipality will only provide services to a property once all outstanding amounts for that property have been settled.

A new policy will also see consumers being charged for the disconnection and reconnection of electricity and water services. Businesses in arrears will have to pay at least half of the outstanding amount.

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