Ricochet News

Overstrand Municipality budget 2018/19 - Summary on what to expect

Jun 6, 2018
Overstrand Municipality budget 2018/19 - Summary on what to expect

At a meeting held on the 30th of May, Councillors approved Overstrand Municipality’s revised 2018/19 Integrated Development Plan as well as the local authority’s operational and capital budget for 2018/19 medium-term revenue and expenditure framework (MTREF).

"The new municipal budget and revised Integrated Development Plan (IDP) will be effective from 1 July 2018 to 30 June 2019," said Municipal Spokesperson, Riana Steenekamp.

"Copies of the revised IDP and documentation pertaining to the approved budget can be viewed at the offices of all area managers, all public libraries within the municipal area and on the municipality’s website (go to www.overstrand.gov.za, click on strategic documents and then on budget or IDP)."

Steenekamp said that the tabling of the draft budget at the end of March solicited some comments and objections from the public. All comments were noted and, in some instances, changes were made to the budget.

"Combined, the budgeted operational and capital expenditure for 2018/19 will amount to R1,328 billion (R1,134 billion operational + R194,2 million capital)," she added.

"The cost to the consumer has been kept to a baseline increase of 6% in property tax and consumer services, with the exception of electricity from Eskom where the increase will be 6.84% on average."

CAPITAL BUDGET

Steenekamp said that at the time of tabling the 2018/19 budget, the Mayor emphasised that the municipality will continue to invest in and upgrade bulk infrastructure over the long term, which basically boils down to replacing ageing and leaking water reticulation mains as well as undertaking sewerage reticulation projects.

"The proposed capital budget for 2018/19 amounts to R194,2 million, an increase of 66.5% from the 2017/18 adjusted budget of R116,6 million," she said.

"Capital budget spend from own funds will be R132,2 million, funded in part by an external loan of R54 million."

In addition, an amount of R6,5 million has been earmarked for ward-specific projects, amounting to R500 000 in each of the 13 wards.

OPERATIONAL BUDGET

"The approved operational budget for 2018/19 amounts to R1,134 billion compared to the current amended budget of R1,052 billion and represents a 7.8% increase.

"Salaries, wages and allowances comprise R378 million or 33.3% of the operational budget. This figure includes the remuneration of councillors. Salary increase negotiations for municipal employees have not yet been finalised at a national level; hence provision for a 7% annual salary adjustment has been made in this budget," Steenekamp said.

"The budget also provides for a zero-based approach to all expense items that can be controlled. Nevertheless, the need to manage scarce commodities such as water optimally, the increase in the price of electricity and the cost of chemicals required to purify water did have an impact on operational costs."

BUDGETED REVENUE

The total budgeted revenue for 2018/19 amounts to R1,080 billion, excluding capital grants. This is in comparison with an adjusted budget of R1,048 billion in 2017/18, and represents a 3.1% increase.

"The basic charge for electricity will increase by 9%. To offset this, units will increase as follows: First 350 units by 5.8%; next 250 units by 6.1%; all units above 600 by 6.85%," Steenekamp said.  

"For water and sewage, tariffs have been set according to the cost of delivering the service, with an average increase of 6%.

"The water usage block tariff has, however, been restructured based on the tariff for 0 – 6 k? of water, a tariff which increases by 11.5% and amounts to R3.60 (VAT included) per month. This is in line with a National Treasury directive, which specifies that the level and structure of water tariffs must be fully cost reflective. At present the cost of providing water stands at ± R24 per k?."

She said that water-borne sewage for single and intermediate residential units will be calculated at 70% of potable water consumed with a cap of 35 k?.

"Water-borne sewage for general residential units (blocks of flats) will be calculated at 90% of potable water consumed with a cap of 50 k?," Steenekamp said.

"In terms of water-borne sewerage, all properties will also pay a basic charge subject to the classification of the service."

She said that the tariffs for refuse removal are set to increase by 6% in accordance with the 2018/19 budget.

TARIFF INCREASES IN SUM

Property rates: Residential 6%
Electricity: 6.8%
Water: 6.38%
Sewerage: 6.04%
Refuse: 6.01%