
DEAR Editor;
At the Ugu Council meeting held end of February, an unfunded adjustment budget was passed again.
Ugu’s budget is unfunded as far as opening balances are concerned since 2016.
This is due to the high gross debtor’s book of R747m that remains uncollected and a high creditors balance of R602m that remains unpaid.
Due to a material under-collection of revenue during the current financial year, the municipality has no option but to reduce its expenditure by R84m to balance the books or otherwise run the risk of not receiving its equitable share from the National Treasury at the end of March 2022.
Measures to be implemented to achieve these savings:
– Contract water tankers to be suspended
– All overtime to be capped at 40 hours per month and paid two months after it has been worked
– Halt all non-core functions that are provided by the municipality
– Halt all recruitment on all budgeted vacant positions
– Halt the hiring of TLBs and procure these for the municipality
– Consider reducing supervisory positions
– Consider halting the 24-hour service and close operations at 19:00 during the week and not work through weekends (except in exceptional circumstances)
The above measures will have a severe negative impact on the already very poor service delivery of Ugu.
The DA objected to the passing of this budget as the ruling party insisted on spending millions on the completion of an office block, instead of rather settling long outstanding debt and improving service delivery by investing in much-needed plant and equipment to repair burst pipes and leaks timeously.
Treasury declared the original budget unfunded because there is no provision to pay the creditors which currently amount to R602m.
They threatened to withhold equitable share if the budget remains unfunded and recommended not to use operating revenue on capital projects. The adjustment budget fails both of these requirements.
There is no provision to settle any debts, and an undisclosed amount of operating revenue will be used for building new offices.
No cost-benefit analysis has been done to illustrate that the building costs are more efficient than the current lease that is in place.
Under the circumstances, Treasury will likely do what it threatened because they made it clear that this adjustment budget is the last opportunity to meet the requirements for a funded budget.
It was irresponsible for such a budget to be tabled and approved given the implications.
The Auditor-General’s report was also tabled during this sitting and the outcomes show no improvement from the two previous findings of a qualified opinion with findings.
One of the alarming bases of the qualified opinion is that Ugu’s liquidity remains a huge concern.
As a result, the municipality might not be able to fulfil its financial obligations as it does not have enough investment, cash and other assets to repay its short term obligations.
This significantly contributes to growing concern, uncertainty as well as severe cash flow and operational difficulties.
These conditions indicate that a material uncertainty exists that may cast significant doubt on Ugu’s ability to continue as a going concern.
CLLR GEORGE HENDERSON
DA Ugu Caucus Leader
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