The National Treasury has today published the operating and capital budgets of municipalities as adopted by their respective councils on its website. These budgets give an overview of expected revenue and expenditure trends in local government over the next three years, referred to as the 2017/18 Medium Term Revenue and Expenditure Framework (MTREF). The revenue and expenditure numbers are aggregated from the annual budgets that municipal managers are legally required to submit to the National Treasury and the relevant provincial treasury.
The published information is presented in a variety of ways, including aggregated municipal budget totals for the 2017/18 financial year and over the medium term period. In addition, the information is presented per category of municipality and per province.
In aggregate, budgeted revenue for 2017/18 is R386 billion, which is expected to increase to R410 billion in 2018/19 and R438 billion in 2019/20.
Total municipal expenditure in 2017/18 is estimated to be R417 billion, increasing to R439 billion in 2018/19 and R467 billion in 2019/20. Expenditure for 2017/18 is 5.8 per cent higher than the 2016/17 MTREF.
In the 2017/18 financial year, a net deficit of R3.3 billion is expected, a position that remains in deficit of R1.4 billion in 2018/19 and R717 million in 2019/20.
Municipal operating expenditure on the trading services consisting of water, electricity, waste water management and waste management is budgeted to increase from R166 billion in 2016/17 to R174 billion in 2017/18. In 2017/18 this equates to just over half the total operating expenditure of municipalities.
Bulk purchases of electricity and water total R110 billion of the aggregated operating expenditure of R346 billion or 32 per cent. Bulk purchases are expected to grow to R127 billion by 2019/20 representing 32.2 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 been institutionalised as part of Section 71 in-year reporting. R21.5 billion will be allocated in 2017/18 to repairs and maintenance of assets from operating expenditure. This will increase to R23.2 billion in 2018/19 and R24.7 billion in 2019/20.
Capital expenditure has increased by 1.7 per cent compared to the 2016/17 MTREF. Of the overall budget of municipalities, capital expenditure in aggregate represents 16.9 per cent in 2017/18, 15.8 per cent in 2018/19 and 15.9 per cent in 2019/20.
Total capital expenditure for 2017/18 is R70.6 billion and comprises R31.7 billion for trading services (electricity, water, waste water management and waste management). Expenditure on the four trading services will increase to R32.1 billion and increase to R33.9 billion in the outer years of the MTREF.
The 2017/18 capital budget reflects a R45.3 billion investment in new infrastructure which is 64.1 per cent of the total capital budget. Investment in the renewal of existing assets will be approximately R25.3 billion or 35.9 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. The information is also used by National Treasury as the basis for the In-year Management, Monitoring and Reporting System for Local Government (IYM). 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. All this information feeds into the Municipal Money open local government data portal and can be accessed as follows: www.municipalmoney.gov.za. In addition, the Municipal Money raw data can be accessed directly from http://municipaldata.treasury.gov.za.
To improve the quality of reporting, the Municipal Budget and Reporting Regulations promulgated in 2009 prescribed new budget reporting formats for municipalities. In terms of the 2009 regulations, municipalities must submit their 2017/18 MTREF budgets in the prescribed A1 Schedules as per the regulations.
All of the 257 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 231 of 257 (90 per cent) municipalities managed to achieve this reconciliation last year, for the 2017/18 MTREF 238 of 257 (93 per cent) 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.
Issued by: National Treasury