Summary – Eth

The City’s consolidated R 52.3 billion draft budget for the 2020/2021 financial year is available online for comment. The consolidated budget consists the capital budget of approximately R 6.9 billion and an operating budget of R 45.4 billion in 2020/21.

The budget has been tabled at a time when the country faces an economic crisis, together with the outbreak of the Coronavirus (COVID-19) pandemic that has brought markets to a standstill, globally. The City however assures residents that, despite these challenges, uninterrupted service delivery remains a priority.

The City is fully aware of the ramifications of the national lockdown on income and have taken measures to assist residents during this crisis. The City, together with other metros are also in discussions with National Treasury to allow consumers to enter into payment arrangements after the lockdown has been uplifted. This is however dependent on the state of the economy and affordability at that time.

The following interventions are also being introduced to mitigate the effects of the coronavirus pandemic and provide relief to consumers and business:

The City will resume consultations with all stakeholders regarding the impact of the coronavirus after the 21 days of the lockdown. The City will nevertheless continually review budgets and approved cost containment regulations and policy will be stringently implemented and monitored.

However, with only 60 days cash reserves on hand, the municipality is dependent on income from rates and services to ensure uninterrupted service delivery and thus appeals to those that can pay for services to continue to do so.

In compiling the draft budget, the City had to adopt several interventions to cushion the most vulnerable citizens whilst still trying to balance fiscal discipline.

Considering the current challenges, the drafting of the budget was severely restricted. Tariff increases have been substantially decreased from the MTREF projections. Major efforts have been put in place to ensure realistic and affordable tariff increases.

The electricity tariff increase is proposed at 6.9% which is a 50% reduction from the anticipated increase in the MTREF.

An increase of 23% was initially forecast to balance the municipal budget. However, following the review by the Budget Prioritisation Committee, negotiations with Umgeni Water Board to reduce their tariff increase to 6.9%, a tariff increase of 9.9% is being proposed. Compared to last five years’ increases of 15%, this is a welcome relief to consumers. The City has made every effort to keep eThekwini’s sales tariff to a minimum. The rollout of the Western and Northern Aqueduct projects have also impacted the water tariff increase.

The forecast increases for sewerage and refuse tariffs were both 15%. However, following the reprioritisation and reviewing of all expenditure items, the increase has been reduced to a more affordable 9.9%.

To help homeowners during these tough economic times, the City approved a new Indigent Policy in February 2020 which will provide welcome relief to those living on properties valued under R500 000. This is a huge increase in the qualifying threshold property value from R 230 000 last year. The income per household has been capped at R 3 600 per month to ensure that the right households are targeted.