The Vhembe District Municipality (VDM) adopted its 2013/14 budget, totalling R1.3 billion with an operational budget of just over R746 million and a capital budget of close to R583 million.

The operational budget is 56% of the total budget and the capital budget 43%. Last year’s budget of just over R1 billion was divided more equally: 52% for the operational budget and 48% for the capital budget.

In the operational budget for the new financial year, employees-related costs of nearly R414million form the major part of the operational expenditure. Employees-related costs constitute 55% of the operational budget and 31% of the total budget. Add the R9.5 million to remunerate councillors and salaries rise to R423.5 million (57% of the operational budget).

Depreciation of asset impairment accounts for R65 million of the operational expenditure (close to 9% of the operational budget) and materials and bulk purchases just above R64 million (close to 8%). Other expenditure comprises the rest of the operational budget and amounts to just above R194 million (26%of the operational budget).

The expected operational income is just above R681 million, with the result that the VDM budgeted for a deficit of R65 million. If further expected capital transfers and contributions of just over R46 million materialise, the deficit will come down to close to R19 million. The contributions are funds provided by external organizations to assist with infrastructure development.  Of the R681 million total operating revenue, a big portion of R583 million is from “transfers recognized – operational”, which could be government funded. The total operating revenue excludes capital transfers and contributions.

The total capital expenditure is R582,8 million, of which 92% or R536,7 million is funded by the national government. The other 8% will be generated internally. Were it not for the taxpayers’ money in the coffers of the national government, the district municipality would not have been able to initiate capital projects.

Vhembe’s contribution to capital projects in the district, according to Vhembe’s media liaison officer, Mr Moses Shibambu, includes R6 million for roads, R8.5 million for local economic development (LED) projects and R17.5 million for sewerage. Vhembe’s contribution towards sanitation will be R25 million. It comes as no surprise that the contribution to water projects is way above the others and amounts to R521 million. These capital projects accounts for R578.2 million of the capital expenditure.

According to the budget document provided by Vhembe’s municipal manager, Mr Masala Makumule, water trading services brings in R428.3 million, but the same water trading services incur an expenditure of R488.6 million.

Vhembe’s total current assets are R308.5 million and the total non-current assets amount to R2,4 billion. A current asset is an asset that can be converted into cash or used to pay current liabilities within a year, such as cash, cash equivalents and accounts receivable. A non-current asset is described as property, plant and equipment which are assets and property that cannot be converted into cash easily. Vhembe’s total current liabilities are R578.3 million.