Editor – After adopting the Final Budget for the Alfred Duma Local Municipality, it is clear that the financial position of the municipality has become precarious due to the ANC government upgrading the Alfred Duma Local Municipality with effect from July 1, 2018.
Being an unfunded mandate with the inclusion of the Indaka Municipality in August 2016 into the old Emnambithi/Ladysmith Municipality, this now automatically raises the salaries by an extra R42 million and places the operational budget in a deficit of R10 million.
Salaries and allowances (R359 million) make up 42.6% of the total operating expenditure of R842.3 million.
From the balance of the operating budget – apart from electricity purchases, planning studies, consultants, legal expenses, repairs and maintenance and other operating expenses – the ruling party has budgeted for non-core functions such as the SALGA Games and sports events – R1.1 million; mayoral projects and events – R8.6 million; conferences – R2 million; and Ladysmith Black Mambazo Music Academy – R3 million.
Despite the fact that the accumulated surplus is not currently fully cash-backed and would have to be funded from the 2017/2018 year’s cash-backed accumulated surplus and a R30 million investment, the majority party still wishes to spend monies from capital funding (on among others) the replacement of vehicles (R20 million) and the building of a music academy for R13 million.
Furthermore, the cost ratio for 2018/2019 is projected below 1,68:1, which is well below the Treasury norm of 3:1.
Noting the negative financial implications, the local municipality does not have sufficient cash-backed reserves to fund the capital budget or the high value of depreciation of R187 million, further noting that this would impact negatively on the availability of reserves to support future capital budgets and the day-to-day operations of the municipality.
Hence, the Democratic Alliance (DA) voted against the 2018/2019 Budget.
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