City budget cuts millions

2018-09-28 15:42
Msunduzi slashes contracted services bill.

Msunduzi slashes contracted services bill.

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Msunduzi has adjusted its 2018/19 budget to reduce its operating expenditure by R103 million following recommendations by the National Treasury.

In a report that came before council on Thursday, the budget manager Jerome Cele said during the first two months of the financial year, which began in July, the municipality experienced a drop in the revenue collection rate.

The Witness previously reported that Msunduzi needed revenue of at least R400 million monthly but it had been collecting around R330 million, forcing the municipality to dig into its reserves to cover some of the expenses.

During his presentation on Thursday, Cele highlighted that the major changes would be on contracted services, on which the City had initially planned to spend R605 million.

“On security costs, an amount of R99 million was spent in 2017/18 and [on] this adjustment it has been reduced to R60 million. Consultants have been reduced by R67 million from R605 million to R538 million,” he said.

The budget for catering at events like Nyus’ ivolume has also been cut by R1,7 million.

Cele told council that the allocation for legal costs had also been reduced to R8 million. “As a result of these adjustments, the municipality’s projected operating surplus has increased from R103,9 million to R207 million.”

Acting municipal manager Neli Ngcobo said the adjustments would not negatively affect service delivery and the capital projects that were on the approved development plan would remain the same. The capital budget has increases due to additional grant funding.

“We’ve identified areas where we are bleeding unnecessarily ... We are saying, for example in terms of legal costs, let’s not call a senior counsel when there is no need for one.

“Let’s bring back the culture of learning and management in terms of how to deal with disciplining a person. You don’t have to always suspend a person and bring in attorneys,” she said.

The councillors commended the administration for identifying areas where the municipality could cut its expenditure while not compromising on service delivery.

DA councillor Naleni Naidoo said the adjustments had been long coming since the council approved the implementation of the cost containment plan earlier this year.

DA caucus leader Sibongiseni Majola also welcomed the special adjustments budget, but was concerned about whether it complied with the Municipal Finance Management Act.

ANC councillor Eunice Majola-Zondi was concerned about what would happen if the City’s legal bill exceeded the budgeted R8 million due to some unforeseen circumstances.

Ngcobo said Msunduzi was complying with section 28 of the MFMA because the budget was based on assumptions, therefore adjustments could be made when there was a need.

On the legal costs, she said the municipality’s annual bill was sitting at around R20 million and some of the costs were unnecessary. She said she was also getting an expert to help her analyse Msunduzi’s spend on attorneys and the report would be coming to council soon.

“It cannot be right that all the attorneys that we are using when they bill us it is always in the millions ... What are we paying for really?”

Ngcobo acknowledged that there would be cases where the municipality would need to defend itself, but said some of the matters could be solved using internal processes.

Some councillors were disappointed that there were no changes on the revenue part of the budget. They had hoped for an increase from R5 million.

Read more on:    pietermaritzburg  |  msunduzi municipality

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