A 2026/27 Johannesburg budget with huge tariff increases for residents and ratepayers, a R8.8 billion allocation to address critical infrastructure while there is a R185 billion infrastructure backlog, and a promise to turn the city's poor financial situation around, has been presented by Finance MMC Loyiso Masuku.
The budget for operational expenditure, which includes salaries, is R88.3 billion.
In her speech, Masuku acknowledged some of the criticism contained in Finance Minister Enoch Godongwana's scathing letter to Executive Mayor Dada Morero earlier this month, in which he admonished the City's leadership about an unfunded budget, an illegal salary deal, and a declining revenue collection rate.
"Johannesburg is not a failed city, it is a city under pressure. Service coverage remains significant: 99.3% of residents have access to water, 96% enjoy access to dignified sanitation, 92% have access to electricity, and 87% are serviced by our refuse removal services. These numbers reflect the deliberate efforts of successive ANC administrations since 1996 to improve the lives of residents and to expand services in an inclusive and transformative way," she said.
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"A household may be connected to water, but if pipes burst repeatedly, dignity is interrupted. A home connected to electricity still suffers if the network is unstable. A road still exists even when potholes make it dangerous. That is why infrastructure, maintenance, revenue recovery and institutional reform are at the centre of this budget," she added.
Masuku acknowledged that debt to Eskom and Rand Water must be paid. "Creditor settlements impose a direct constraint on new capital investment. Every rand allocated to creditor repayments is unavailable for new infrastructure. This is the right trade-off: unresolved obligations would damage the City's credit standing, risk supply interruptions and undermine investor confidence. Some communities will not see new capital investment in 2026/27 because the City is honouring obligations that protect the systems that serve them daily. That is a difficult, but honest, message," she said.
Tariff increases for residents
There are some hefty price increases in store for Johannesburg residents from July on their municipal accounts:
- Water: Water costs will increase by 12.5%. Johannesburg Water's increases are driven by the 11% bulk purchase cost increase from Rand Water. Combined water and wastewater revenue is projected at R21.5 billion. Water tariffs use an increasing block model: the first 6 kl per month is free; the next block (>6-10 kl) is charged at R33.57/kl; the highest consumption block (above 50 kl) is charged at R100.40/kl.
- Sanitation: Increases by 11%.
- Electricity: Increases by 8.63%. City Power proposes an overall average tariff increase of 9.01%, consistent with Eskom's bulk purchase cost increase following NERSA's approval. By limiting increases to residential customers below the 9.01% rate, the effective average household increase is brought down to 8.63%.
- Refuse removal (Pikitup): Increases by 6.2%.
- Property rates: Go up by 3.6%.
Joburg's massive infrastructure backlog
Masuku said Johannesburg's combined infrastructure backlog is estimated at over R220 billion, while non-revenue water losses stand at 44.7% and electricity losses at 27%.
"No honest budget speech can avoid these facts. Johannesburg cannot budget its way out of a R220 billion infrastructure backlog through municipal resources alone. We must fund what is urgent, protect what is essential, leverage what is possible, and partner where our own resources fall short. For us to achieve the above, we must manage every cent diligently and ensure accountability across all levels. We must exercise, in word and practice, a zero-tolerance approach to corruption and maladministration," she said.
Johannesburg's three core trading services - electricity (City Power), water and sanitation (Johannesburg Water), and waste management (Pikitup) - have been weakened by split accountability, declining revenue collection, insufficient capital investment, governance failures and institutional fatigue, Masuku said.
"The combined infrastructure renewal backlog across Johannesburg Water, City Power and the Johannesburg Roads Agency (JRA) exceeds R185 billion. Without meaningful institutional reform, capital investment alone cannot achieve sustainable service delivery," she said.
The capital expenditure budget allocation in the next financial year - R8.8 billion - does not even scratch the surface. Money for infrastructure development is already largely reliant on loans and external funding. Masuku said loans account for R3.5 billion (39.9%) of the capital budget.
"The scale of our infrastructure challenges requires innovative funding models. This budget supports alternative funding through multilateral development banks, development finance institutions, commercial banks, national grants, provincial partnerships, public-private partnerships, land value capture, climate finance, infrastructure funds, waste-to-energy partnerships and private sector co-investment," she said.
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Some of this funding includes R27 billion in foreign direct investment, the R5.4 billion Microsoft data centre, a R7 billion waste-to-energy partnership and the R760 million Midrand Bulk Water Storage Facility.
"These investments show that Johannesburg is still investable. But investor confidence survives on implementation - on stable governance, reliable water, electricity stability and governance stability. A city does not attract investment by wishing for it. It attracts investment by adhering to the highest standards of good governance, stability, predictability and, finally, consistent improvements to infrastructure," Masuku said.
Masuku said the City was also tabling a turnaround framework, as financial recovery cannot be achieved solely through revenue collection.
"It requires simultaneous action on expenditure control, trading services reform, audit remediation, entity stabilisation, capital discipline, labour-management stability and stronger oversight," she said.
The framework is organised around six recovery pillars: financial recovery; revenue enhancement; expenditure containment; creditor and liquidity reform; governance and compliance; and labour stability.
On Thursday, the full council will debate the budget speech.
- This story first appeared on EWN.
