Notice of approved Annual Budget and Integrated Development Plan for 2026/27

Table 1 (Overview of the 2026/27 MTREF)

	Current Year	2026/27 Medium Term Revenue and Expenditure
	Adjusted Budget 2025/26	Budget Year 2026/27	Budget Year +1 2027/28	Budget Year +2 2028/29
	R	R	R	R
Total Revenue	-656 316 942,00	-683 913 495,55	-726 382 700,81	-763 507 831,55
Total Expenditure	741 173 487,70	615 762 895,55	605 285 076,82	622 709 980,13
(Surplus)/Deficit	84 856 545,70	-68 150 600,00	-121 097 623,99	-140 797 851,42
Capital Expenditure	114 093 380,81	68 150 600,00	39 310 740,01	2 963 342,00

The municipality is showing an operational surplus, and the budget remains unfunded even when we consider the current outstanding debtors’ and creditors’ balances.

As it stands, agreements have been entered into with some creditors, but the full Eskom balance remains payable immediately, until such a time an agreement is signed.

However, MFMA circular 124 has highlighted the Municipal Debt Relief that is conditional, and application based, has therefore been sanctioned where Eskom will write-off all debt municipalities owe as on 31 March 2023 (excluding the March 2023 current account).

This will be done over three national financial years and require as a critical qualification that municipalities monthly honour their current (monthly consumption).

Municipal debt relief is an extraordinary support that aims to enforce a return to basic best practise financial management while the ring-fencing of municipal debt and permanent interest suppression thereof as part of the programme is intended to open fiscal capacity in the municipality to facilitate payment to Eskom, water boards and other creditors.

The municipality applied in September 2023 and was approved as from December 2023. The municipality is assessed monthly for compliance with MFMA circular 124. Upon meeting all the conditions, a compliance certificate is issued by National Treasury to the municipality as well as Eskom.

There are various reporting compliance requirements that have been proclaimed through the MFMA circulars 124, 127, 128, 129, 130, 132 and 134. The municipality has included these reporting requirements in the monthly s71 and quarterly s52 reports.

The municipality’s continued participation in the Eskom Debt Relief Programme is uncertain and subject to ongoing deliberations with NT and Eskom.

The municipality’s debt that is the subject of municipal debt relief amounts to R398 279 009.98 as of 31 March 2023 after Eskom affected the necessary adjustment for any payment arrangement.

Revenue budget

The continued provision and expansion of municipal services is dependent on the Municipality generating sufficient revenues. Efficient and effective revenue management is thus of vital importance in ensuring the ongoing financial sustainability of the Municipality.

Furthermore, in accordance with the MFMA, expenditure must be limited to the realistically anticipated revenues.

The Municipality’s revenue management strategy includes the following key components:

National Treasury’s guidelines in this regard.
Tariff Policies.
Property Rates Policy.
Indigent Policy and provision of free basic services.
The level of property rates and tariff increases must ensure financially sustainable service delivery.
The level of property rates and tariff increases to consider the maintenance and replacement of infrastructure, including the expansion of services.
Determining fully cost reflective tariffs for trading services.
Electricity bulk tariff increases as approved by the National Electricity Regulator of South Africa (NERSA).
Efficient revenue management, targeting an 70% annual collection rate for property rates and service charges.
Impact of loadshedding on municipal service delivery.
Sustainable Electricity Trading
Eskom Bulk Bill Normalization

In the 2026/27 financial year, property rates and service charges amount to R428 million increases to R458 million and R490 million in the 2027/28 and 2028/29 financial years, respectively.

The following continued efforts to increase the revenue base were introduced in 2019 to 2025:

Implementation of cost reflective tariffs after a cost of supply study was conducted.
Implementation of drought tariff
Introduction of environmental levy
Introduction of the fire services levy
Implementation of quarterly reconciliation of valuation roll to billing schedule.
Implementation of NERSA compliant cost of supply study for electricity business
Implementation of Sustainable Electricity Trading
Implementation of Eskom Bulk Bill Normalization
Ringfencing of municipal services to ensure each service is self-sufficient.

The service charges as stated above are the main source of funding for the municipality with a contribution of R372 million or 54% of the total budget. The individual service contribution to service charges is as follows:

Electricity 54%
Water 18%
Refuse 10%
Sanitation 19%

There is a general increase in revenue, as result of tariff increases and continued implementation of cost reflective tariffs. Total operating revenue has increased by 4% or R27 million for the 2026/27 financial year, compared to the 2025/26 Adjustments Budget.

This increase in revenue is due to increased tariffs and allocations of government grants.

Funding for the 2026/27 Operating Budget is funded from various sources, the major sources being service charges such as electricity, water, sanitation and refuse collection (54%), property rates (8%), grants and subsidies received from National and Provincial Governments (31%).

To fund the 2026/27 Operating Budget, the following increases in property rates and service charges will be affected with effect from 1 July 2026:

Property rates: Increase with 3.7%
Water: Increase with 3.7%
Refuse: Increase with 3.7%
Sewerage: Increase with 3.7%
Sanitation: Increase with 3.7%
Electricity: Increase with 14.2% to Domestic prepaid & TOU (Time of use), 6% to FBE (indigents) and 9.01% for other electricity tariffs as approved by NERSA.

Expenditure Budget

Total operating expenditure for the 2026/27 financial year amounts to R615 million, resulting in a budgeted operating surplus of R68 million. Compared to the 2025/26 Adjustments Budget, operational expenditure decreased by R125 million (17%).

The municipality is currently struggling financially, and cost containment measures are implemented. Cost containment measures include a monthly curb on overtime, acting allowances, and travel expenses. It also includes the stopping of non-essential procurement.

For the two outer years, operational expenditure decreases by 2% for 2027/28 and increases by 3% for 2028/29 respectively. The 2027/28 and 2028/29 budgets reflect operating surpluses of R121 million and R140 million respectively.

The major operating expenditure items for 2026/27 are Remuneration (council and employees) (36%), Bulk electricity purchases (29%), Contracted services (13%) and Operational cost (14%).

A budget funding plan is also in place to ensure that only core municipal functions are prioritised in implementing the budget.

Capital Budget

Of the total amount of R68 million for 2026/27, an amount of R66 million has been budgeted for the development of infrastructure, which represents 98% of the total capital budget.

The individual projects to be undertaken in the respective wards within the municipality have been outlined in the budget document.

BUDGET ALLOCATION ACCORDING TO IDP PRIORITIES

Public participation

The budget consultation process took place in the form of a live presentation via social media and a series of meetings held throughout the municipal area with the elected public representatives, employees of the Municipality, Civil Society, business, labour, National and Provincial Governments on how the budget addresses the IDP priorities and objectives. The feedback flowing from these meetings was referred to the relevant Directorates for their attention.

All budget related policies have been reviewed and workshopped with top management. The budget was workshopped with councillors in March and May 2026. The policies were also subjected to public participation.

Comments were received verbally via the public hearings held in all wards. Comments were also received in writing via WhatsApp messages, Emails, and written inputs via letters.

Comments received were objections on mainly the following:

Poor state and maintenance of municipal infrastructure.
Outsourcing of municipal services as opposed to insourcing.
Value for money of outsourced services.
Hiring of vehicles as opposed to buying municipal fleet.
Eskom debt and plans in place to address the settlement thereof.
Budget to be communicated per town/ward in future.
Control over overtime and acting allowances paid to municipal staff.

Poor service delivery, high unemployment rate, affordability were the prevalent reasons for objections.

Residents are urged to pay their municipal accounts monthly as this enables the municipality to sustain and improve the level of municipal services delivered to the community.

The indigent support (FBS) is also available to assists indigent households that have limited financial ability to pay for municipal services. Please visit our municipal offices for applications.

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