The recent tabling of Thulamela Municipality's 2023/24 budget has once again raised concerns about the priorities of the council. A decreasing amount of money appears to be allocated for actual service delivery, with a significant portion going towards salaries, remunerating councillors, and paying consultants.
The budget for the upcoming year includes a salary bill of R356,57 million, which is R23,7 million more than the previous year's pre-audit figure and accounts for 39% of the operating expenditure. Provision is made for a 5.4% increase in salaries as per the signed collective agreement with the Bargaining Council. Additionally, R36,2 million has been allocated for councillor remuneration, bringing the percentage to 43%. The remuneration for councillors has increased by 4.8%, but may be more, depending on the upper limit set by government.
However, the significant concern lies in the substantial increase in the cost of outside contractors and consultants. These services become necessary when full-time staff members are unable to perform certain tasks or lack the necessary capacity. The expected cost for using outside contractors has reached a record high of R218,05 million, accounting for 24% of the operational expenses.
Despite previous warnings from the auditor-general to curb these costs, the municipality does not appear to have addressed the issue effectively. Six years ago, Thulamela Municipality did not have a budget item for outside contractors, but since 2019, this amount has significantly increased and has now become one of the largest expense items. In the latest budget, salaries, councillor remuneration, and the use of outside contractors constitute 66.45% of the operating expenses.
The budget explains that certain services, such as the development of a valuation roll and occupational health services, have been outsourced. However, the exact amount spent on security services is not disclosed. The budget does reveal that R26 million has been allocated for legal advice and litigation fees, R38 million for the maintenance of buildings and facilities, and R3,3 million for items such as catering, exhibitions, event promoters, and hiring stages, sound equipment, and crew.
Where does the money come from?
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The operational expenses are mostly funded by government grants and subsidies. The municipality banks on receiving R634,67 million from the government, which represents 71% of its income. The biggest chunk, R589,6 million, comes via an equitable-share grant. An integrated national electrification programme (INEP) grant adds R28,2 million and the municipal infrastructure grant (MIG) allows R5,3 million to be used for operational expenses.
Thulamela Municipality's almost total reliance on government grants is evident when scrutinising their own income sources. The biggest item in this category is property rates. Council budgets for R97,6 million to come from property taxes, after a 5,3% increase is implemented.
Service charges for waste removal are expected to bring in R25,5 million, while the sale of goods and rendering of other services should collect R23,4 million. Interest earned from current and non-current assets is expected to collect R60 million.
However, interest earned on outstanding accounts seems to be a red herring, because Thulamela Municipality is rather good at writing off bad debt. In the 2021/22 annual financial statement, R238,98 million of the bad debts were reportedly written off. The issue of debt impairment was prominently raised in the AG's report, but her figure was much higher. "Material allowance for impairment amounting to R508 176 003 was made as a result of irrecoverable receivables," she said.
In her budget speech, Mayor Sarah Rambuda alluded to this problem of not collecting own income. "The provision for doubtful debt decreased from R235 million to R85 million. This was caused by the debt relief programme that has been running during the past financial year," she said. The municipality is anticipating collecting 40 % of on all billed revenue.
As mentioned earlier, the bulk of the money (66,5%) goes towards paying for salaries, the councillors and the myriad contractors and consultants. Operational costs, which are presumed to be costs associated with running the offices and catering for staff expenses, amount to R127,56 million (14% of total). Depreciation and amortisation take another 9%, or R81,1 million.
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The bulk of the expenses (66,5%) goes towards paying for salaries, the councillors and the myriad contractors and consultants. |
Some money left for capital projects.
Thulamela Municipality should receive two grants for capital projects from the national government. The biggest of these is the MIG, which is expected to bring in R113,78 million. Another source is the neighbourhood development partners grant of R25 million.
When the money received from government for capital projects is supplemented with Thulamela's own income, the total of the capital budget increases to R343,56 million.
In her budget speech, Mayor Rambuda identified the following projects, which focus on the upgrading of roads and stormwater drainage:
1. Ha-Makhuvha Ring Road – R32 million (and R29 million in 2024/25)
2. Mapate Access Road – R2 million (and R24 million in 2024/25)
3. Matavhela Internal Streets Upgrading – R5 million (and R20 million in 2024/25)
4. Lwamondo to Thavhani Road – R2 million (and R18 million in 2024/25)
5. UIF to Shell Garage – R25 million (and R12 million in 2024/25)
6. De Paradise to Old KFC Access Road – R15 million (and R7 million in 2024/2025)
7. Upgrading of internal streets & lighting in Shayandima – R15 million (and R25 million in 2024/2025)
8. Makumbane to Thavhani Ring Road – R20 million
9. Tshiulungoma Ring Road – R20 million
10. Thohoyandou K&K Portion of Maniini Streets – R33 million (and R37 million in 2024/25)
11. Construction of culverts in all 41 Wards – R80 million (and R10 million in 2024/25)
12. Maniini K to L internal streets – R20 million
13. Shayandima Extension 3 internal streets – R20 million (and R5 million in 2023/24)
14. Shayandima A and Extension 3 internal streets – R20 million (and R5 million in 2023/24)
15. Thohoyandou M internal streets – R12 million – (and R10 million in 2023/24).
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The various grants awarded to Thulamela Municipality. |