The Thulamela Municipality approved a record operating budget of nearly R1 billion three weeks ago, but a closer look at the figures shows that the picture is not that pretty. The salary burden still weighs in at more than 40%, while almost 70% of the operating income will be from transfers and subsidies.

During her budget presentation on 24 June, Mayor Sarah Rambuda said that the total municipal revenue was estimated at R959.4 million, up from the previous year’s R880.5 million. The bulk of the money to pay for operating expenses (R586,18 million) will come from transfers and subsidies from provincial and national departments. Less than 17% of the council’s income will come from property rates and service charges. What is even more concerning is that the municipality expects to write off R104,9 million as bad debt.

An expensive beast to feed

Thulamela Municipality has long been criticised for its excessive salary bill, which by far exceeds the national norm for municipalities. In 2016/17, this expense still constituted 27% of the total, but it went up to as high as 47,33% in 2020/21. The new budget sets the employee-related cost at R327,5 million (40,19% of the total).

While the salary bill, compared as a percentage of the total operating expense, has gone down slightly, the budget for external contractors has gone up considerably. The auditor-general has warned against this practice, where work that municipal staff members used to do gets outsourced to independent contractors, on several occasions. In the case of Thulamela, this expense item first appeared in 2018/19 when R99,8 million was spent on contracted services. In the following years, the figure went down slightly, but in the new budget this expense is estimated to be just below R160 million, or 18,77% of the total operating expenditure.

The newly approved budget makes provision for R514,41 million to be paid towards salaries, councillor remuneration and contracted services. This constitutes 63,12% of the total operating expenditure. This is more than double the amount in 2016/17, when the staff and councillors cost the municipality R252,93 million (30,11% of the total).

The budget also assumes that staff members will be satisfied with a 4,9% increase in the coming year. The mayor announced that the remuneration for councillors would rise by only 3%.

Where will the money come from?

Thulamela Municipality expects property rates to add R99,63 million to the council’s coffers. Service charges will bring in an estimated R44,99 million. A 4,9% increase in tariffs has been announced.

The rental of facilities and equipment is expected to collect an optimistic R4,86 million (up from R2,77 million in 2020/21). “However, due to [an] outcry by the teams, the use of stadiums has not increased, the tariff remains the same,” said Mayor Rambuda.

The council expects to earn R22 million from external investments, while interest on outstanding debtor accounts is expected to bring in R36,76 million. The outstanding debtors are, however, a serious headache for the municipality. Provision for debt impairment stands at a staggering R104,9 million. Two years ago, this expense was still just more than R71 million.

The money to keep the municipality running comes mainly from the government. Thulamela expects to receive R702,84 million from transfers and subsidies. This amount includes R116,67 million earmarked for capital projects.

“There is an additional grant of R7 million for neighbourhood development. The Municipal Infrastructure Grant (MIG) has increased from R111.4 million to R113,9 million revenue, while INEP (Integrated National Electrification Programme) decreased from R23 million to R22.2 million,” said Mayor Rambuda. The Extended Public Works Programme contribution is R4.8 million.

Capital projects

Thulamela expects to spend R363,71 million in the coming year on capital projects. The MIG contribution will be R109,53 million, but the bulk of the money (R255,16 million) will come from the council’s own resources.

The mayor highlighted several of the capital projects for which work will commence or start in the next year. R30 million was allocated to re-gravelling of rural roads. In the Thoho­yandou CBD, one of the main feeding roads will be upgraded at an expected cost of R17 million.

Two testing centres, namely the Tshikombani Testing Centre at Mandala and the Tshaulu Testing Centre, will be upgraded. The amount budgeted for this expense is R20 million, but it will stretch over two financial years.

The Thulamela Show site at Maniini in Ward 41 is to be upgraded at a cost of R3 million.

The municipality also plans on connecting electricity to 920 households from various villages and R22,2 million was set aside for this purpose. “It is our duty to make sure that we provide streetlights in our area of jurisdiction,” said Mayor Rambuda. R4,55 million was budgeted for the provision of streetlights.