Note to editors: Please find attached English and Afrikaans soundbites by Cllr David Ross and Sesotho by Karabo Khakhau MP.
The tabling of the Nala Local Municipality Draft Budget provides incorrect and misleading information that would have to be explained to residents in the municipality before the adoption of the Final Budget in June 2024.
In a consolidated overview of the draft budget, tabled to Council on 2 April 2024, total operating revenue was stated at R572 097 187 million, based on a collection rate of 80%.
However, the unrealistic anticipated revenue, does not account for the current year based on collection rates to date and actual revenue collected in previous years.
In reaction to the misleading budget, we will table an alternative budget with a realistic collection rate of 65% and address non-core expenditure.
National Treasury’s circular 126 for the 2024/25 MTEF encourages municipalities to prepare a surplus budget. It is in this regard that Municipalities are cautioned by the National and Provincial Treasuries to assume collection rates that are unrealistic and unattainable. It is also important to note that with effect of 1 July 2024, all municipal councils are expected to approve a surplus budget.
If Nala adopts a budget based on an 80% collection rate the reality of a 65% collection rate will constitute a loss of R57 198,831 million. The continued losses for municipalities over the years have plunged Free State Municipalities into Financial Distress.
The DA will therefore table a credible budget for adoption that starts with the preparation of a surplus budget based on a realistic collection rate.
The DA’s alternative budget will provide inter alia for:
- Limiting expenditure according to the correct anticipated revenues to be collected;
- Maximising revenue collection by drafting of a credible funding plan with inflation-related tariffs for residents; and
- Updating of the Indigent register and general evaluation roll by the revenue enhancement committee.
Failure to approve a credible, funded budget may result in the Council implementing section 171 of the MFMA dealing with financial misconduct where incorrect and misleading information is provided to the Council.
We are committed to improving the funding model for Nala and to achieving positive outcomes for our constituency by driving economic development and job creation to mitigate inequality and attract investment in our municipality.