JB Marks Local Municipality is in existence only by name and geographical location in Potchefstroom, North West, because a “provisional” 2020/21 budget that the council recently approved is not legally compliant.
The provincial finance department said on Friday that it had withheld the release of the equitable share to JB Marks.
“Legally, we do not know what provisional approval means because the municipal budget and reporting regulations are clear on what constitutes approval of the budget of a municipality. As a consequence, the equitable share which was due on July 7 did not flow,” said the head of the provincial treasury, Ndlela Kunene.
Kunene said that “as things stand now – or at the time when we invoked the provision to withhold the equitable share – JB Marks did not have a compliant council resolution that demonstrated that the council had approved the budget”.
But the municipality told the provincial treasury that the provisional budget was compliant. On July 3, the JB Marks council passed a provisional R1.8 billion budget with a list of conditions set out for the council to first satisfy, including the submission of bank statements and other financial reports, failing which the budget would be rejected.
According to the Constitution, a municipality can be placed under administration of the provincial government if a budget is not tabled by the end of the financial year on June 30.
Before the start of the national lockdown in March, the provincial government had placed the municipality under administration, but the administrator, Moss Kgantsi, was yet to assume office because the council could not meet.
City Press heard that, on July 7, Treasury transferred the first tranche of unconditional and conditional grants to JB Marks, totalling about R200 million. However, failure by the municipality to approve the budget meant that the political and administrative leadership of the municipality had no legal standing, capacity or authority to spend any of the money in the 2020/21 budget.
Kunene said that, “in terms of the Municipal Finance Management Act, to the extent that you do not have a budget, any transactions that will be affected by the municipality effective from July 1 must be endorsed by the finance MEC”.
He said the municipality had made representations to the department stating that it had complied and therefore the equitable share should be released.
“We are in the process of responding to its letter over the weekend. Part of what we are going to deal with is the legality of the provisional budget.
“Our position is that, at the time when the equitable share was supposed to be transferred, the municipality had provisional council approval. When something is provisional, it has a suspensive condition. You cannot approve a budget conditionally – you approve it and then provide the resolution.”
JB Marks spokesperson Willie Maphosa said late yesterday that, according to the council resolution, the budget was adopted on July 3 and the use of the word "provisional" in a subsequent media statement was “an honest mistake”.