MOSSEL BAY NEWS - The total 2015/16 municipal budget amounts to R948 078. This translates into an operating budget of R812 663 236, or 85.7% of the total budget, and a capital budget of R135 931 842, or 14.3% of the total budget.
In his Executive Summary of the Annual Budget, Mossel Bay Municipality's Chief Financial Officer Mr MK Botha warns that,
"The future balancing of the operational budget will become more and more difficult every year. This was already seen in the balancing of the outer years of the budget plan. The ratepayers cannot afford to pay more for services. Therefore, the Council and Management should curtail new priorities and appointment of more staff that will place an additional burden on the ratepayers in terms of increased property rates and service charges."
This follows statistics by the Western Cape Treasury, reported in a Working Paper in 2014 on the Socio-economic Profile for the Mossel Bay Municipality, that "according to forecasts by the Department of Social Development, Mossel Bay Municipality's population will continue to grow from 92 364 in 2013 tot 97 981 in 2017, with the additional approximately 8 500 people between 2013 and 2017."
The report continues: "What is striking about the shift in the Mossel Bay population is the significant increase in the aged population, increasing from 7.2 per cent in 2001 to 10.6 per cent in 2013."
This report also indicates that a staggering 17.4% of households in Mossel Bay earn no income at all, and in total, just more than 20% of the population earn less than R4 800 per month.
Mr Botha also alluded to the national economic climate against which the budget had to be prepared, indicating that South Africa's economic growth for 2015 is projected to be only 2%, down from the 2.2% projected in October 2014.
Mossel Bay Municipality is depending a lot on service charges to balance its budget. The service charges consist of the following:
* Electricity charges - R320.5-million
* Water charges - R93.9-million
* Sewerage charges - R46.4-million
* Refuse removal charges - R36.6-million, and
* Other - R32.7-million.
At the time of finalising the 2015/16 draft municipal budget, the National Energy Regulator of SA (Nersa) has approved the Eskom tariff increase for municipalities at 14.69%. The Minister of Finance in his budget speech announced a 2% per kWh charge, which is not included in the tariffs nor in the purchase cost.
The Mossel Bay municipal electricity tariff increase on sales to consumers totals only 12.20% and the municipality will fund the shortfall.
However, Eskom has approached the National Energy Regulator of SA (Nersa) to reopen its multiyear price determination this financial year because of funding constraints and applied to raise electricity tariffs by 25.3% from July 1.
Although the draft budget indicates that the municipality's dependency on electricity tariffs to balance the budget has reduced, consumers may yet face unbudgeted for electricity tariff increases in the coming months as further increases may be forced upon the municipality and necessarily will have to be passed on to residents.
The draft budget includes an increase of 6% on all water, refuse and sewerage tariffs. Should Mossel Bay be declared a drought-stricken area, different water tariffs will apply.
Refuse removal and sewerage services are categorised as an economic service, which means that it is supposed to pay for itself or even make a small profit.
As with the other service charges, property rates will increase at 6% on all categories. The revenues included in the draft budget provides that the first R15 000 valuation of any residential property is exempted in terms of the Property Rates Act and that an additional rebate be granted on the balance of the valuation up to a maximum of R35 000. Owners of residential properties will therefore not pay taxes on the first R50 000 of the property.
All of the above increases do not generate enough revenue to balance the operating budget before recognition of capital transfers and donated assets. The shortfall of R13 368 831 does not implicate a cash shortfall and it is the stated intention of the municipal management to fund the budget over a period of time.
The major allocations in the Capital Budget are for streets and stormwater: R36.1-million; electricity services: R21.9-million; sewerage services: R21.1-million; water services: R16.4-million; and Human Settlements: R24.9-million.
The main categories of expenditure from the cash budget for 2015/2016 will be employee-related costs of R240.7-million, which at 29.6% of the cash budget is marginally below the national norm of 30%; bulk purchases of R251.3-million, or 30.9% of the operating budget; and other general expenses of R145.3-million, or 17.9% of the operating budget.
This category includes an amount of R24.2-million in respect of housing top-structures, which is derived from Provincial Human Settlements Funding.
The Executive Mayor, Alderlady Marie Ferreira, when she tabled the Draft Budget at the Council meeting on 26 March, mentioned that the municipality would need R1.5-billion to eradicate the housing backlog in Mossel Bay.
Residents of Mossel Bay have better access to basic minimum services than those of other municipalities in the Eden district.
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