As with the 2006/7 financial year, taxpayers can once again prepare themselves for a 6% increase in rates and taxes following the Makhado Municipality’s approval of its annual budget for 2007/8.

Good news is that the municipality will only implement its new municipal property rates policy by July 2008 in accordance with the completion of a new property valuation roll. For the 2007/8 financial year, the assessment rate has increased to 12%. In her budget speech, the mayor of the Makhado Municipality, Cllr Glory Mashaba, said that "it should be noted that the additional increase on the assessment rates is based on the fact that council’s valuation roll is very old as it was last valued in 1994." She said the effect on consumers will be very minimal as it will not be more than R10 per month extra, on average. Apart from the 12% increase in assessment rates, a 6% increase also applies to refuse removal services, electricity, water, sewage and sundry tariffs.

Operating Budget

The municipality’s operating estimates for the 2007/8 financial years stand at an amount of R246,4million. This represents an almost 13% increase in the initial amount budgeted for the previous financial year. Mashaba said that this year’s operational estimates reflect a surplus of R66 737 as they are not allowed to budget for a deficit in terms of the Municipal Finance Management Act.

Salary Bill

The municipality’s salary bill once again makes for some interesting reading. As with previous years, the bill soars above the national average set by the national treasury. The budget amount for salaries for the 2007/8 financial year is no exception, constituting 44,6% of the municipality’s total operating budget. This by far exceeds the 35% national average. The municipality’s salary bill grew with just over 21% from the initial R90 201 669 during the 2006/7 financial year, to R110 201 669 for the 2007/8 financial year. The budget also provides for a salary increase of 6,4% as per the Bargaining Council Agreement – about the same as last year.

The 6% increase in salaries for officials last year is, however, in stark contrast with the almost 55,2% increase in remuneration for the 70 plus councillors. The budget for councillor remuneration came to just over R8 million last year. This year, it stands at just over R12,5 million. Earlier this year the councillors, in their adjustment budget, already obtained an increase following the implementation of a Council decision as per majority vote.

Maintenance

In contrast to an ever-increasing salary bill, the amount budgeted for maintenance decreased, much to the concern of many. The R20 555 581 provided for in the 2007/8 budget is almost 5% less than the R21 607 311 of the 2006/7 financial years.

Capital Estimates

The municipality’s proposed estimates, consisting of capital projects, are totalling more than R74 million for 2007/8.

These will be financed through their operational income (R5 527 260), the Municipal Infrastructure Grant (R24 088 085), the Finance Management Grant (R803 500), a loan of just over R28 million, Inep (R1 517 300), land sales (R11 906 000), Project Management Unit (R48 000) and Municipal Systems Improvement Grant (R1 300 000).

Important projects

Some of the more important projects listed in the 2007/8 budget and the amounts to be spent on them, include the valuation roll (R4,5 million), water, sewage, electricity bulk services (R11,9 million), electrification (R23,5 million), Extension 2: Eltivillas road surfacing (R2 million), Dzanani Testing Station (R3,3 million), office block at the town civic centre (R5 million), Tshikota high mast (R1 million), resurfacing and maintenance of CBD streets (R3,3 million), Vleifontein’s Joe Slovo Street (R4 million), Vuwani internal streets (R3 million) and maintenance of industrial streets (R2 million).

General expenditure

Under the municipality’s general expenditure, the budget also makes provision with regard to financial help towards the fight against HIV/Aids (R55 000), sports and youth (R55 000), the elderly and disabled people (R55 000), women and children (R100 000), disasters (R100 000), bursaries (R200 000), tourism (R100 000), the Soutpansberg Mountain Marathon (R7 900), Dzata Museum (R100 000), Kremetart Cycle Race (R9 700), Hanglip 54 Golf Tournament (R16 000), Bosveld Marathon (R7 900), Land of Legend Marathon (R7 900), Makhado Football Association (R18 500), Soutpansberg Entrepreneurs Week (R10 000), training (R1,2 million), Integrated Development Plan (R300 000), Local Economic Development (R250 000), marketing (R180 000) and ward committees (R200 000).

Revenue

Most of the municipality’s operational revenue for 2007/8 will be derived from the sale of electricity (R103 594 124), an increase of 14% over that of the previous year. The second largest source of income is from the equitable share (R85 803 000). Rates and taxes will contribute R9 903 941 to revenue, an increase of 21% since the 2006/7 financial year, while water sales will amount to R14 594 352. Sanitation, refuse removal, interest and "other income" will bring in R6 624 659, R5 609 061, R3 180 000 and R18 307 093 respectively.

Expenditure

As already indicated, the municipality’s salary bill takes the biggest bite out of its operational budget. The second biggest expense falls in the category General Expenses, totalling R58 739 492 or 23,75% of the total operating budget. Bulk purchases (such as electricity) constitute the third biggest expense, totalling R48 245 800 or 19,51% of the total budget.

Sewage problem

During her budget speech, Cllr Mashaba highlighted Louis Trichardt´s sewage problem.

"The sewerage infrastructure of this town is old and has become too small and therefore we humbly and urgently request about R15 million to upgrade the sewerage plant in order to cope with developments that are taking place," she said. Where the R15 million is to come from, is not certain.

Vandalism

Cllr Mashaba also touched on the huge problem of vandalism and the theft of the municipality’s electricity infrastructure.

"The value of material lost in 2005/6 was R4,5 million. Currently, the figure from June 2006 to April 2007 is R3,5 million. This has a very serious and negative effect on service delivery, with specific reference to electrical and water supply," she said. She mentioned Sinthumule/Kutama, Elim, Mpheni and Louis Trichardt’s main water supply boreholes as areas of concern.

Provision of free basic electricity and free basic energy

The budget mentions that household earning less than R1 500 per month and those who are unemployed can apply and register on the municipal indigent register in order to receive 50 units of free electricity every month. The municipality is also giving a R40 subsidy per month per household to consumers who are using solar energy in areas where there is no electricity yet.

Reaction

In reaction to the budget, DA councillor Jacques Smalle asked that the registration and verification process of indigents must receive a higher priority. He also asked for a proper maintenance plan and said that R3,3 million is not enough to maintain the town’s roads. As for the municipality’s credit control, Smalle said the DA demands that council restructure the financial department, as people were placed in departments without receiving relevant training or skills. He also referred to the fact that the municipality had yet to appoint a chief financial officer. Cllr Mashaba also made mention of this in her speech.

"The finance department of our municipality needs serious attention as we do not have enough qualified staff at senior management level. The post of the chief financial officer has been advertised several times and yet, suitable candidates could not be found. We have since advertised this post together with other critical posts in this department," she said.

Mr Dries Joubert, chairman of the TAU SA North also reacted and expressed his concern about the municipality’s decision to approve the budget. He said that, in spite of clear guidelines from the national treasury, the Makhado Municipal budget has increased far beyond what is prescribed by government. Joubert also said that the decrease in the amount budgeted for maintenance is clearly visible in the decay of the town’s water, sewage and road infrastructure.

"This item has shown a constant decrease over the past seven years," he said.