Treasury tells Msunduzi to adjust ‘unfunded’ budget

2019-11-05 14:27
Acting Msunduzi municipal manager Nelisiwe Ngcobo.

Acting Msunduzi municipal manager Nelisiwe Ngcobo.

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National Treasury has instructed the cash-strapped Msunduzi to adjust its “unfunded” 2019/20 budget, which had a projected deficit of R72 million.

Council was yesterday forced to swallow a bitter pill when the acting municipal manager Nelisiwe Ngcobo presented a report requesting the approval of an adjustment budget, four months into the new financial year and two months before the January mid-term budget review.

She said when Treasury assessed Msunduzi’s budget it found that the projected revenue was overstated while the expenditure was understated. While the municipality had anticipated having a surplus of more than R200 million at the end of the financial year, in June, Treasury’s calculations projected a deficit of R72 million.

In light of National Treasury’s findings, Ngcobo said the city would be reducing its operating budget by R200 million and the capital budget would go down by R55 million. The biggest cut, of R139,8 million from R586,3 million, would be on contracted services for lawyers and consultants that the City appoints on different projects. Acting chief financial officer Dudu­ Ndlovu-Gambu said they hoped the budget cuts would help the municipality accumulate a substantial surplus of R477 million, which would help rebuild its reserves as they had depleted over the years.

Councillors blamed poor revenue collection practices for Msunduzi’s financial woes. The ACDP’s Rienus Niemand said the problem would persist until the City stopped turning a blind eye to the rampant theft of its water and electricity. “That’s where we are bleeding as a municipality.”

He said he had been raising the matter since 2016 and even took the officials and the former mayor, Themba Njilo, to show them where the culprits were.

The ANC’s Jabu Ngubo said the City’sfinancial situation was not going to change until both council and the administration worked side-by-side in tackling the challenges of revenue collection.

These, she said, included reviving revenue streams that had been neglected.

She said they must do a proper analysis of cost-drivers so that they could look into ways of reducing them.

Sibongiseni Majola of the DA said more than 50% of the City’s customers were not billed but they continued consuming the services that Msunduzi had to pay for from Umgeni Water and Eskom.

He said the municipality was also not doing itself any favours by not registering more than 30 000 indigent households.

Majola said council must also stop the “irregular” and “excessive” spending on bodyguards where no life threat analysis had been recieved from the police.

His colleague Bill Lambert said Monday’s meeting was a “sombre moment” in the history of Msunduzi.

He questioned why the adjusted budget did not reflect the funds the City anticipated to get in dividends from entities such as the timber plantation that was supposed to put about R27 million into the municipality’s purse.

Vic Winterbach raised the issue of the City’s “flawed” 2019 general valuation roll. The DA has called for its suspension pending the finalisation of the more than 4 000 objections from property owners. The party’s motion has, however not been brought to council for debate.

ANC’s Ntuthuko Ntshangase tried to stop him from raising the issue, saying it was not relevant but Winterbach explained property rates had a direct bearing on the budget, therefore the motion to suspend the roll should have been addressed before the adjustment.

The IFP’s Dolo Zondi said the City’s finances needed all hands on deck so revenue collection and cost containment must be everyone’s priority, not just the administration’s.

Read more on:    pietermaritzburg  |  msunduzi municipality

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