Finance MEC in denial, says DA

2011-10-18 00:00

THE Democratic Alliance says KZN Finance MEC Ina Cronjé is in denial over the poor state of uMngeni municipality’s finances, and questioned her recent description of the municipality as financially viable.

DA MPL George Mari said it appears Cronjé is opposed to recommendations made last week by the Co-operative Governance and Traditional Affairs (Cogta) Department that the municipality consider the services of a financial administrator.

DA Cogta spokesperson Mari suggested Cronjé read the Treasury Report “Financial Landscape of Municipalities” dated March 2011, which makes clear that:

• The municipality has been unable to generate sufficient income to cover operating expenditure over the last three years.

• The deficit has increased from 2008/9 to 2009/2010 and is expected to increase an unreasonable 118%, while expenses have increased by 38%. It is unclear what makes up this amount

• Bulk purchases are budgeted to increase by R17,6 million but revenue from service charges is budgeted to increase by R12,3 million, which means the municipality will not recover the additional costs.

• The recent valuation has been problematic as is evident in the increase of rates income from R67 million to R93 million. This has resul­ted in the uMngeni Rates Forum lodging objections.

• Irregular expenditure to the tune of R2,9 million was found, while the municipality experienced significant electricity losses of around 44% or of R10,1 million.

• 63% of the municipality’s income is generated from service charges and rates. This shows that it uses its own revenue to ensure its sustainability. Should this not happen, it is unable to sustain itself.

Mari added that Cronjé’s criticism of media reports on Cogta’s recommendation merely compounded the situation. “Chiding journalists will not make the problem go away and any attempt by the MEC to rescue this municipality will be undermined should she go into denial mode,” he said.

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