Annual budget passed despite significant shortfall
The fact that it was passed despite being in deficit of millions of rand, defies understanding.
LYDENBURG – Thaba Chweu’s budget for the 2014/15 financial year was passed on June 18, despite having a shortfall of R260 million in cash reserves.
The fact that it was passed despite being in deficit of millions of rand, defies understanding.
Last year the passing of the budget was pushed through on a Sunday even though some councillors, including those of the opposition party were not even aware of the meeting, and objections were made with regard to irregularities.
The municipality acknowledged a deficit of R45 million on the statement of operating expenditure. “This is mainly attributed to the fact that it was unable to reduce the budgeted expenditure any further as contracts had been reduced from R92 million to R47 million.”
Regardless of the shortfall, the compensation of employees was not reduced as “all posts are currently filled”.
TCM is also still owes Eskom R163 million, and trade creditors (local businesses supplying stock to the municipality) a staggering R72 million.
The governing body presented a six-month development and implementation strategy,which included debtor cleaning to ensure that they were billed for services rendered, and that IT systems were functioning properly. It also required that faulty meters be replaced and the collection of outstanding balances were prioritised.
According to DA Cllr Nicko Janse van Vuuren, however, it is worrying that the amount budgeted for repairs and maintenance has remained the same.
“Taking inflation into account and also the dire state of our infrastructure, it is concerning that this amount has not increased drastically. It is also interesting to note that of the total budget of R428 million some R140 million is received in the form of grants and subsidies, which essentially makes this municipality grant dependant and not sustainable on its own.”
He said that the municipality was further crippled by debt to trade creditors to the tune of R72 million, which made it very difficult to keep their day-to-day operations running.
“In light of the above it is very difficult to say how and when TCM will climb out of this deep hole, but I seeing a willingness amongst officials to turn the situation around. Whether that will happen at the end of the day, remains to be seen,” Janse van Vuuren added.
TCM said in conclusion that this revenue enhancement strategy was anticipated to result in an anticipated R218 million increase. “This will reduce the shortfall of cash reserves amounting to R243 million during the 2014/15 financial year. The municipality is confident that this plan can be implemented, but it will require assistance of provincial treasury, the Department of Water Affairs, the Department of Cooperative Governance and Traditional Affairs (Cogta) and Eskom. It will also requie the approval of the long-term contract by the Development Bank of South Africa, if Cogta is unable to solicit grant funding from the Department of Education and Eskom.
“The municipality committed on June 11 that the above strategy would be discussed with the residents of Lydenburg, Graskop and Sabie for buy-in and support from the community in order to ensure that the plan achieves the desired results.”
