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News and media releases: 2009
News and media releases: 2009
| Strong budget in tight times |
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| 20 May 2009 |
Executive mayor Amos Masondo talks of ‘using the budget to deepen democracy, build a caring society and make local government work for all citizens'
Executive Mayor Amos Masondo announced his budget for the 2009/2010 year at a special press briefing at his council chambers on 20 May. Despite facing increased economic constraints and a decline in grant funding from the national government, Masondo indicated that "the City's balance sheet shows the continuation of a strong financial position in the outer years" as a result of improvements in cash and investments. In this financial year, the City will service its first municipal bond, CoJ1, successfully with a sum of R1-billion set aside to pay investors when it matures on 13 April 2010. And for the first time in the mayor's term of office, the budget reflects a substantial decrease in capital spending as big projects like the Rea Vaya Bus Rapid Transit system and 2010 developments near completion. Cut in capexIt will spend R3,5-billion - down from R6,4-billion in the previous year - on capital projects, with the bulk of the allocations going to its two critical service entities, City Power and Joburg Water.With a budget allocation of R825-million - or 41 percent - City Power will continue to improve bulk infrastructure, public lighting, network upgrades, do cable replacement as well as electrification of informal areas such as Ennerdale South and others. Joburg Water takes 34 percent of the capital budget, and will use the majority of its R691-million allocation on water infrastructure and bulk wastewater and sewer upgrades. Masondo stressed that the City's budget was a people's budget, ensuring ongoing transformation of local government and the continued improvement of the quality of life of Joburg residents. "This budget leaves no person in our city untouched. What is presented here and what council will vote on will have a direct and measurable impact on the lives of our people." RevenueAs a municipality that was almost entirely self-funding, Joburg would strive to increase its revenue collection from the current 87 percent to over 90 percent, noted the member of the mayoral committee for economic development and finance, Parks Tau.Sketching the context of this year's budget, he said various changes in the revenue environment had required that the City "be very prudent". These included the changes in its tax base as a result of the new Valuation Roll and the requirements of the Municipal Property Rates Act, which had shifted the tax burden away from businesses to residential property owners. The City had proposed an amendment to the business tariff to address this discrepancy, suggesting it increases from 1,2 cents in the rand to 1,54 cents in the rand, Tau confirmed. "The purpose of the proposal is to restore the parity that prevailed prior to 1 July 2008 on property rates of the commercial and residential sectors." The planned price hike of 34 percent by Eskom - still to be approved by Nersa, the national energy regulator - will also put a strain on residents. The member of the mayoral committee for service infrastructure, Ros Greeff, said the City had catered for a 30 percent increase in the electricity tariff under the current budgetary conditions. "Certainly there is a possibility that we would have to amend the tariffs as they stand by about 4 percent should Nersa approve the 34 percent suggested hike." Tau pointed out that Joburg often absorbed price increases without passing these on to its residents. "Instead of the ratepayer absorbing the bulk of the pressure, the City has decided to curtail its expenses and improve on our revenue maximisation and collection." Operating costsOperating costs to keep the municipal monolith on its feet will take R22,7-billion, an increase of 14 percent over last year.Municipal-owned entities take the largest cut of this budget, walking off with just more than 60 percent. Again, the biggest allocations go to City Power and Joburg Water. Departments favoured in the operating budget include finance and metro police. Finance will use the majority of its allocation of R1,8-million for debt impairment and finance charges. The Mayor's Office also gets a substantial allocation of R979-million, specifically to ensure "that we successfully host the 2010 World Cup and leave a lasting legacy for our people beyond 2010". The money will be used to comply with the bid book in terms of fan parks and public viewing sites and to set up the International Broadcasting Centre at Nasrec. |
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