The National Treasury today publishes on its website the operating and capital budgets of 278 municipalities as adopted by their respective councils. These budgets give an overview of expected revenue and expenditure trends in local government over the next three years, referred to as the 2012/13 Medium Term Revenue and Expenditure framework (MTREF).
The revenue and expenditure numbers are compiled from the annual budgets that municipal managers must to submit to the National Treasury and the relevant provincial treasury.
The information published today is presented in a variety of ways, including aggregated municipal budget totals for the 2012/13 financial year and over the medium term period, information per category of municipality and information per province.
In aggregate, budgeted revenue for 2012/13 is approximately R264.0 billion, which is expected to increase to R284.0 billion in 2013/14 and R311.0 billion in 2014/15.
Total municipal expenditure in 2012/13 is estimated to be R281.1 billion which will increase to R297.1 billion in 2013/14 and R324.6 billion in 2014/15. Expenditure for 2012/13 has increased by 12.7 per cent compared to the 2011/12 MTREF.
In the 2012/13 financial year, a net deficit of R372.9 million is indicated; this position improves significantly to reflect surpluses of R2.1 billion and R3.1 billion respectively in the two outer years of the MTREF period.
Municipal operating expenditure on the trading services consisting of water, electricity, waste water management and waste management is budgeted to increase from R104.9 billion in 2011/12 to R120.9 billion in 2012/13. In 2012/13 this equates to just over half the total operating expenditure.
Bulk purchases of electricity and water totals R69.1 billion of the aggregated operating expenditure of R229.8 billion or 30 per cent. Bulk purchases is expected to grow to R91.9 billion by 2014/15 representing 33.9 per cent of total operating expenditure; bulk purchase of electricity from Eskom is a significant contributing factor to this growth.
Reporting on operational repairs and maintenance figures has now been institutionalised as part of Section 71 in-year reporting. R11.9 billion will be allocated in 2012/13 to repairs and maintenance of assets from operating expenditure. This will increase to R13.1 billion and R14.1 billion in the two outer years of the MTREF.
Capital expenditure has increased by 16.5 per cent compared to the 2011/12 MTREF.
Of the overall budget of municipalities, capital expenditure in aggregate represents 18.4 per cent in 2012/13, 17.2 per cent in 2013/14 and 16.9 per cent in 2014/15.
Total capital expenditure for 2012/13 is R51.8 billion and comprises R24.2 billion for trading services consisting of electricity, water, waste water management and waste management. Expenditure on the four trading services will increase to R25.5 billion and R27.6 billion in the outer years of the MTREF.
The 2012/13 capital budget reflects a R38.9 billion investment in new infrastructure which is 75.2 per cent of the total capital budget. Investment in the renewal if existing assets will be approximately R12.9 billion or 24.8 per cent of the capital budget.
The National Treasury publishes local government MTREF information on an annual basis. Regularly published budget information enables communities to hold their municipal councils to account. Information is also used by National Treasury as the basis for the In-year Management, Monitoring and Reporting System for Local Government. The Section 71 reports published by the National Treasury give an account of actual revenue collection and spending by municipalities per quarter against their budgeted figures.
To improve the quality of reporting, the Municipal Budget and Reporting Regulations promulgated in 2009 prescribed new budget reporting formats for municipalities. All municipalities had to submit their 2012/13 MTREF budgets in the prescribed A1 Schedules as per the regulations. Improvements in reporting this year can be attributed to the collective efforts of the National Treasury and provincial treasuries to work with municipalities to improve both budgeting and reporting.
All 278 municipalities conformed to the prescribed reporting formats as per the Municipal Budget and Reporting Regulations. Also the number of municipalities whose electronically submitted budgets reconciled with the actual budget approved by their councils has increased. While only 112 municipalities managed to achieve this reconciliation last year, this year the budgets of 149 municipalities were verified as reconciling. Efforts will continue to ensure all municipalities meet requirements and to further improve the quality of budget information.
Annexure A sets out the full list of information that can be found on the website, and a high level summary of information in terms of category of municipality and per province.
Annexure B contains a sets key graphs articulating in numbers in graphical format.
Go to www.treasury.gov.za/mfma for more information.
Issued by: National Treasury
3 Dec 2012