GRAAFF-REINET NEWS — The mid-year budget and performance assessment for 2017/18 financial year were tabled in Council recently, and as a result of this, recommendations were made that an adjustment budget be drafted as a result of some of the variances detailed in the assessment.

The Mayor of Dr Beyers Naudé Local Municipality, Cllr Deon de Vos, presented the adjustment budget for 2017/2018 to council on 26 February.

He commented that all the senior management positions had now been filled and that Council needs to give management their full support, making sure that they apply the policies of Dr Beyers Naudé Municipality and work together to make this municipality the best municipality it can be.

"Our community deserves service delivery and we must ensure that this is our ultimate goal," said Mayor de Vos.

The indication from the mid-year budget and performance assessment was that an adjustment budget was necessary to accommodate the approved rollover of conditional grants (2016/17) to the value of R19.2 million, to correct bulk electricity which was severely under-budgeted for, correction of licenses and permits as well as agency fees, under collection of other revenue, and to correct contracted services which was severely under-budgeted for.

The construction/upgrade of a fire station project to the value of R3.6 million has been taken out of the budget as it could not be linked to any funding.

The capital budget was increased by R18,3 million to accommodate the projects of 2016/17 which had not yet been completed, and these were rolled over, as well as to include refuse trucks (R1 million) and fire vehicles and equipment which will be funded by the Sarah Baartman District Municipality. The Municipal Infrastructure Grants (MIG) projects were adjusted as proposed by the Engineering and Planning Department.

Revenue estimates have changed in the adjustment budget based on actual revenue generated during the first 6 months. Revenue increased from R316.9 million to R326.1 million. Thus revenue increased by R9.2 million which is mainly due to an increase in service charges of R7,7 million and an increase in transfers recognised (R6.4 million), despite a decrease in rates of R4,1 million. The increase in transfers recognised is a result of R4,5 million obtained for the water meter audit for all the areas within the municipality; R280 000 received for the Skills Education and Training Authority (SETA) and R98 000 from the Department of Human Settlements. A correction of R1.6 million was made to correct the amount of revenue recognised from transfers received.

There is an increase in service charges, which is based on the latest trends as discussed in the mid­-year budget and performance assessment.

Expenditure increased from R397.9 million to R440.3 million. The main reasons for the increase can be summarised as follow: Increase in employee cost to accommodate of almost R1 million; re-employment of previously dismissed employees (Jansenville), new appointments of an HR manager, revenue manager and risk officer.

Collection of debt is also only coming in at 85%.

Thus expenditure increased by R42.3 million due to an underestimation by R20 million of the cost of bulk electricity- this is electricity bought by the municipality that is then sold on to consumers. Two other areas where expenditure was underestimated are contracted services to the municipality (a shortfall of R8 million) and finance charges, which have come out at R4,9 million more than expected.

An amount of R6,7 million has been allocated for an increase in other expenditure, which includes expenditure on conditional grants previously not included.

It is a huge concern that the deficit has increased from R81 million to R114 million, and the budget remains unfunded. In simple language, the municipality is short of R114 million, even more than the R81 million in the original budget.

The capital transfers saw a nett increase of R8.3 million. This is due to the inclusion of the roll-over which was approved to the value of R19.5 million. A correction to the Regional Bulk Infrastructure Grant (RBIG) was needed which reduced the grant by R6,2 million.

The R4,1 million included in the original budget for the upgrade of the fire station was taken out of the budget due to no confirmation of funds received, so it cannot be done.

With a shortfall of R114 million, and limited ways of increasing this income, it would appear that the municipality is facing some major challenges in the year to come.

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