Council tables 4% rates increase

Capetonians have until 2 May to have their voices heard on the City of Cape Town’s R52.7 billion draft budget for 2020/21. The draft budget was approved by City council on the eve of the national lockdown. The council sitting was held on 27 March under strict Covid-9 hygiene and social distancing measures and in accordance with the national declarations on essential meetings, according to a statement by the City.

Of much concern currently is the City’s objective to maintain stability amid the Covid-19 disaster. This year, the draft will undergo a public participation process, but no face to face meetings will be held. The public will be able to submit their comments via email to Budget.Comments@capetown.gov.za.

In accordance with national legislation, the process must be finalised by June, and will come into effect on 1 July. Mayco member for finance Ian Neilson says the City does not plan to make a surplus on the sale of services or on the income from rates. He adds that income would be used for service provision.

The draft budget comprises a R44 billion operating allocation and an R8.7 billion capital budget. This year R4.5 billion was proposed in total for safety and security. For transport, R5.6 billion has been proposed while for housing R2.2 billion has been proposed. Other major components for 2020/21, according to the draft document include employee-related costs at a total R15.5 million, which equates to 35.2% of the total budget; and contracted services of R7 billion, which includes repairs and maintenance provisions.

Staff increases, according to the draft document, are mainly due to implementation of the inflation linked increase of 6.25%, as per wage agreements.

Proposed increases . Property rates: 4% . Electricity: 4,8 % . Water and sanitation: 4,5% . Refuse collection: 3,5% No changes have been made to the tariff structure and the tariff increases are applied across the board.

No rates payable for residential properties on the first R300 000. . A 3,96% increase are proposed in the residential property rate from R0,00555 c/R to R0,00577 c/R. . New property rates categories with lower or no rates have been created for not-for-profit organisations that own their properties and undertake various public benefit activities.

In addition a social assistance package for rates and services of more than R3 billion was proposed. “Despite keeping the (tariff) increases within that of inflation, the City has nevertheless been able to provide for some new initiatives, such as the Law Enforcement Advancement Programme (Leap) that adds a further 1 000 law enforcement officers to the city, increased spending of the Mayoral Urban Regeneration Programme (Murp) and advancement of the new water plan,” says Neilson. Importantly, one of the key messages during this year’s public participation process is the absolute necessity for residents and businesses to continue to pay rates and services. “Payments are crucial to enable the City to remain financially healthy and to continue providing services, while we all fight the Covid-19 pandemic together.

Prior to the disaster declaration, in the months and weeks leading up to the tabling of the draft budget, much work was done on affordability aspects of rates and services given the already existing economic pressure on customers. Therefore, the draft budget proposes smaller increases of between 3,5% and 4,8%, in line with or below the inflation rate.”

In their comments to the draft budget, civic lobby group Stop CoCT said the City adhered to treasury directives this year to keep increases to the country’s inflation targets. “Of concern to Stop CoCT is the proposed increase of the residential property rates factor.

The City had not even cleared the previous year’s backlog of objections to property valuations, but is yet again proposing to increase our property rates.” The group also expressed concern over the City’s wage bill, that now makes out 35.7% of its total budget. “This is worrisome in the light of the deteriorating services in City departments like refuse collection and in the water and sanitation departments,” said a spokesperson of the group in a statement.

Local business is of the opinion that the proposed annual increase in rates and services will have a direct negative impact on the continued existence of various businesses. “Prior to the announcement of the national lockdown, South Africa’s economy was already under enormous pressure. These difficult economic conditions make it extremely challenging for small and medium businesses to do business,” says Andries Venter, chair of Durbanville Business Chamber (DBC).

“For several businesses, the primary goal of profit-making will inevitably have to be replaced by a goal of business survival. To keep an eye above water, many businesses are already required to put savings measures in place such as scaling down employee numbers or negotiating for reduced rent,” he says. “DBC is very grateful for the excellent service provided by the City of Cape Town, probably the best in the country. In principle, DBC is not opposed to the proposed increase in tariffs, but believes that, given the current challenging economic conditions, the City of Cape Town may need to temporarily postpone the proposed increase. All businesses and households in the Durbanville area will immediately benefit financially from such temporary relief,” Venter says.