LOUIS TRICHARDT – In a somewhat controversial and highly criticised budget tabled on Monday, the Makhado Municipality announced an average increase for consumers of around about 6,5%.

In his budget speech, the mayor of the Makhado Municipality, Cllr Brighton Tlakula, mentioned that the budget had to cater for various demands. Cllr Tlakula said the needs in the various communities, as identified in the Integrated Development Programme (IDP) exceeded R680 million. These demands had to be weighed up against the practical problems and the lack of available funds. Cllr Tlakula especially referred to the limitations set by the Department of Finance, which state that the increase over and above the approved combined estimates for 2001/2002 may not exceed 5,5%. "You will agree with me when I say that the request for Capital Projects exceeded what we anticipated and our current resources. It then had to be reduced," he said.

No projects without cash

Cllr Tlakula emphasized that the estimates tabled are strictly cash funded. "In other word, no expenditure of whatever nature will be allowed or contract entered into, without the necessary hard cash being available in the bank," he said.

The Mayor highlighted four of the aims of the budget, the first one being the Council's responsibility to ensure that every household is provided with the basic needs such as water and municipal services. He said the provision of these services will have an impact on the Operational Budget, but it is a priority that Council cannot shy away from.

The second aim of the budget is to make sure that opportunities for job creation are established and the third is to make sure that there is an improvement in service delivery to the communities. The last aim of the budget is to intensify the fight against the spread of HIV/AIDS.

Capital Estimates

The biggest surprise in the budget was the drop in the Capital Estimates. In 2001/2002 Council provided just over R50 million for investments in capital projects. This was a significant rise compared to the R34 million in the 2002/2001 financial year. For the next year Council only allocated R30 million of its funds for developing infrastructure.

The proposed capital programme consists of 88 items and projects. The most important are a water and sewerage services construction project (R3,04 million), the reconstruction of Unika and Malherbe Streets (R2,02 million) and the reconstruction of Chris Hani Street (R1,9 million). Council budgeted just over R2,8 million for the construction of other roads, bridges and storm water drainage, while R5 million was budgeted for the resurfacing and repairing of existing tar roads.

"Also included in the Estimates is an amount of R3 000 000 for community driven road repair projects, with funding from the Public Works Community Based Projects Funding," the mayor said. Cllr Tlakula recognised the Council's responsibility towards sport and recreation and said a number of soft loans to various sporting codes will be approved in the new financial year.

"No one needs a crystal ball to look into to realise that thousands of millions of rands will be required to provide but only the most basic of services to the current area of jurisdiction of Makhado Municipality," he said.

Operating Budget

The Operating Budget tabled on Monday night amounts to a record R149 505 235, almost R35 million more than that of the previous year. In his speech it was clear that the salary bill is the main culprit as far as expenses are concerned. Cllr Tlakula mentioned that various cutbacks had to be made in terms of requests for additional staff members. "Council is, however, required to fund the difference in the actual current cost of transferred staff from the former R293 towns and the actual salary bill as at date of transfer. This added R3 million to our labour cost," he said. The R293 towns are mainly the rural areas that were incorporated in the Makhado Municipality. The government still pays the salaries of the officials who previously served in the R293 towns, but this is to end soon. The local municipality must also cover the cost of "extras" such as salary increases, overtime and membership of the group insurance fund.

A worrying factor is the percentage that the salary bill makes up of the total budget. Although never mentioned during the tabling of the budget, it is believed that the salary bill accounts for more than 38% of the budget. This is a lot higher than the national norm of between 25% and 30%. It also means that the salary bill alone is a lot higher than the total Capital Estimates.

Another alarming factor is the salary and wage demands. Council made provision for an across the board increase of 5,5% to all employees. "Council has, however, been notified during the past week that no agreement could be reached at national level and that the two Trade Unions are demanding substantial higher increases," Cllr Tlakula said on Monday.

Increases in tariffs

The original deficit in the Operating Budget exceeded R14 million and this had to be financed through various tariff increases. Eskom announced an increase of 6,5% from January 2003 and Council brought its tariff increases in line with this. Charges for Basic Electricity will also rise with 6,5%.

Council proposed that a uniform assessment rate of 6,9c/R be imposed on rateable land only on all properties included in the various valuation rolls. The current system where a 100% rebate on agricultural land is in place will be maintained, but not indefinitely. "All individually proclaimed and registered properties, including farms and small holdings will become liable for property tax in the not too distant future. A new comprehensive valuation roll will therefore have to be compiled for these areas," the Mayor said. New valuation rolls were compiled with regards to the formal R293 towns of Waterval, Makhado and Vuwani and these will come into effect on July 1, 2002. Refuse removal, as well as fees for basic water and water consumption will also rise with 6,5%.

In the Operating Budget a further R7,5 million is allocated for maintenance of roads, bridges and storm water drainage in the various villages.

A mayor's dream

In his opening remarks prior to the budget being tabled, Cllr Tlakula quoted Martin Luther King Junior's famous speech where he referred to a dream of living in a nation where people will not be judged by the colour of their skin but by the content of their character. The mayor reflected on his own dreams and visions of a municipality where every household has water and electricity and where people have jobs. "It is, however, clear that our resources do not allow us to fulfil our dreams of providing services to our people at our own pace. Other measures and sources will have to be exploited so that our dreams can ultimately be realised," he said.

Criticism

The budget was not favourably received by opposition parties and amongst others the DA warned that the municipality is heading towards financial disaster. Cllr Marie Helm of the DA said the provision for capital projects is the smallest in five years. "If the provision for ongoing projects, some of which are running over periods of five years, are subtracted from the current estimates, the real provision for new capital projects in the estimates amount to some R20 million," she said.

"In the mean time the allocations for salaries and allowances have shot up to almost 40%," she added. Cllr Helm said an additional 1% raise in tariffs plus a decrease in the maintenance budget are to be used to finance the six new senior directors' salaries. "If money is taken from the maintenance provision to pay additional salaries, it will eventually become impossible to maintain our assets," Cllr Helm said.

Cllr L Mashau of the UDM was also ferocious in his criticism. "The ANC has neither the will nor ability to conduct the affairs of the Makhado Municipality in an effective, economical, efficient and transparent manner," he said. Cllr Mashau echoed a question of the DA in terms of the validity of the budget. He referred to the Department of Finance's limit on expenditure that sets a 5,5% cap on increases and said the limit is to be set separately on the Capital Estimates and on the Operational Budget.

"The Capital Budget has been reduced at the expense of the Operational Budget by almost 50% and only one million is from our income. Almost R29 million is funded from (internal) loans. Even if the ANC can ignore these now, it will have an impact to the poorest of the poor in the long run," he said.

In its response to criticism, the local ANC branch defended the appointment of six new directors. According to the Chief Whip, Cllr Moss Tseli, the appointment of the directors is a giant step towards transformation and service delivery. Cllr Tseli said the R30 million allocated for capital projects is in the interest of the taxpayers. "The municipality will develop a programme to encourage all residents to pay for the services they receive. The above steps will enable us to allocate more funds to the capital projects in the next financial year," he said.