Oudtshoorn, 31 May 2017 – Oudtshoorn Municipality’s 2017/2018 budget which was approved by Council on 30 May 2017 at a special council meeting, is according to the Executive Mayor Colan Sylvester, the beginning of a new era of clean governance and prudent financial management.
“This budget attempts to return the operations to normality and it has again been prepared with restraint in all areas of expenditure.” Mayor Sylvester assured the greater Oudtshoorn community the right to be provided with high quality reliable services and the resources at our disposal’.
“We are therefore focusing on delivering these services in accordance with the mandate of the municipality as assigned in the constitution.”
Capital Budget
Total funded capital projects for the 2017/2018 financial year amounts to R 37.235 Million with the main focus being the following:
Water Infrastructure R 9.07 Million
Electricity R 6.83 Million
Sanitation R 2.19 Million
Refuse Removal R 3.95 Million
Roads Infrastructure R5.01 Million
Sport and recreation facilities R 7.52 Million
Operating Budget
The capital budget is funded mainly by means of grants from National and Provincial Government in the amount of R 29.88 Million. The remainder will be financed from own revenue generated amounting to R7.349 Million.
The operating budget for the 2017/2018 financial year amounts to R 663.07 Million which represents an increase of R 81.56 million or 14.03% over the 4th revised budget for 2016/2017.
The cost drivers of the increase in the budget can be summarized as follows:
- 7.4% increase in the wage bill in accordance with the multi-year wage agreement.
- Increase in employee related cost and provisions associated with the appointment of critical staff members as well as the filling of positions on a permanent basis.
- Inflationary pressure and the general increase in the price of goods and services.
- Exchange rate fluctuation especially on specialist goods required in service delivery.
- Operational requirements to ensure service delivery standards are complied with, this is specifically in respect of electricity, roads and water and waste water.
Housing allocation for the construction of houses has increased from R 31.95 Million in the
2016/2017 financial year to R 35.06 Million in the 2017/ 2018 financial year. The municipality will continue to expedite the delivery of houses to meet the increasing demand for housing opportunities.
Tariffs
Although revenue sources remain under strain, the municipality has no alternative but to increase tariffs for the 2017/2018 financial year above the norm in accordance with the financial recovery plan that was approved by council. As a result of the worst drought that has hit South Africa in more than 20 years; the municipality will continue to increase water tariffs in the higher end of the sliding scale to aid in the conservation of water and to discourage its excessive use.
Although water tariffs have been increased above CPIX for the current as well as new financial year, they were once again benchmarked with other similar size municipalities and it was found that the tariffs proposed herein falls well within the norm.
Electricity 3.88%, Water between 6.8% and 11.4% depending on the scale of consumption, Sewerage 10.40% and refuse charges 10.40%.
With the commencement of the new valuation roll, assessment rates tariffs have been reduced to counter the increase in valuations. Assessment rates revenue accounts will therefore increase at an average of 10.4%, in accordance with the financial recovery plan. The assessment rate tariff applicable to business and residential properties have been reduced by 7.7% and to agricultural properties by 19.4 per cent.
Indigent subsidies
Provision is made in the operating budget for the subsidizing of indigent households as follows; the first 6Kl of water per month as well as 50 units of electricity will be free of charge, a 100% subsidy for refuse removal and sewerage charges will be given. A rebate on assessment rates will also be given for Indigent households up to a valuation of R70.000.
The budget, according the Sylvester, does not only serve to further assist the financial recovery of the municipality, but also ensure that service delivery needs of all communities are met on a continuous and in a consistent manner.