National Treasury has today released the budget statement for local government for the first quarter of the 2010/11 financial year. The statement covers revenue and expenditure, and conditional grant spending for the period 1 July to 30 September 2010. It is available on the National Treasury's website: www.treasury.gov.za.
National Treasury publishes this information in terms of section 71 of the Municipal Finance Management Act, 2003 (Act No. 56 of 2003) (MFMA), and in terms of section 30(3) of the 2010 Division of Revenue Act. The budgeted figures shown are based on the 2010/11 budgets approved by municipal councils during May and June 2010.
This information, referred to as the In-year Management, Monitoring and Reporting System for Local Government (IYM), will enable provincial and national government to exercise oversight over municipalities, and identify possible problems in implementing municipal budgets and conditional grants. The information will also be of interest to policy makers, researchers, sector specialists and academics with an interest in local government. It is also envisaged that regularly published budget implementation information will empower communities to hold their Municipal Councils accountable.
All information in this statement is based on the section 71 MFMA reports that Municipal Managers and Chief Financial Officers were required to sign and submit to the National Treasury by 12 November 2010. Any queries on the figures in the statement should therefore be referred to the relevant Municipal Manager or Chief Financial Officer. Queries on conditional grants may be referred to the national department responsible for administering the grant.
The number of municipalities that submitted reports fell to 276 in the first quarter of 2010/11 from 280 in the fourth quarter of 2009/10. This slight drop in coverage can be partly attributed to stricter compliance rules. Interestingly, the seven municipalities that did not report for the first quarter of 2010/11 do not include the three municipalities that did not report during the fourth quarter of 2009/10.
As at 30 September 2010, municipalities had in aggregate spent R45.9 billion or 19.7 per cent or of the R232.6 billion total approved budget. The total revenue budget amounted to R243.4 billion for 2010/11, of which aggregated billing accounted for R58.5 billion or 24.0 per cent.
Metropolitan municipalities had billed R31.5 billion or 22.4 per cent of their total revenue budget of R140.6 billion by the end of the first quarter. Ekurhuleni had billed the highest proportion of its revenue at 24.9 per cent, followed by Cape Town at 23.2 per cent.
The aggregated capital budget for all municipalities for 2010/11 is R41.2 billion of which R4.2 billion or 10.2 per cent had been spent by the end of the first quarter. The aggregated capital budget of metropolitan municipalities amounted to R19.6 billion of which R2.0 billion or 10.0 per cent had been spent by 30 September 2010. Most metros spent less than 15 per cent of their capital budget in the first quarter. The City of Johannesburg had the lowest capital spending rate at only 3.6 per cent, with expenditure at the City of Tshwane and Ekurhuleni Metro not far behind at 6.6 per cent and 7.6 per cent respectively.
Aggregated municipal consumer debts amounted to R62.3 billion as at 30 September 2010. Of this, government accounted for R3.4 billion or 5.5 per cent. Households accounted for the largest component at R37.7 billion or 60.6 per cent of the total.
Metropolitan municipalities were owed a total of R35.4 billion at 30 September 2010. This is an increase of R3.9 billion or 12.4 per cent from the same period last year. The biggest percentage growth from the previous year is in City of Johannesburg, where it increased by 23.5 per cent or R2.0 billion. Nelson Mandela Bay's debtors book increased by 16.5 per cent or R275 million, Ekurhuleni Metro by 15.1 per cent or R1.1 billion and Cape Town's by 11.8 per cent or R558 million.
Secondary cities were owed R12.8 billion at the end of the first quarter, an increase of R2.3 billion or 18.3 per cent from the corresponding period last year. Households accounted for R7.7 billion or 67.3 per cent of the total.
The creditor age analysis shows that municipalities owed R10.3 billion as at 30 September 2010. This is R1.3 billion less than the R11.6 billion municipalities owed at the end of the fourth quarter of 2009/10. North West has the highest percentage of creditors outstanding for more than 90 days at 45.9 per cent, followed by the Northern Cape at 44.3 per cent, Limpopo at 34.5 per cent and Mpumalanga at 31.2 per cent. Of concern are the figures reported for the period 0 to 30 days by Gauteng and KwaZulu-Natal of R4.7 billion and R1.6 billion respectively.
The Division of Revenue Act, 2010 (Act No.1 of 2010) allocated R54.4 billion in transfers to local government. This consists of the unconditional transfer (Equitable Share) of R30.2 billion and conditional transfers of R24.2 billion. The latter amount consists of direct conditional grants to municipalities of R21.2 billion and allocations-in-kind of R3 billion.
During the first quarter national departments administering conditional grants transferred R5.9 billion or 28.3 per cent of the direct conditional grants to municipalities. According to expenditure reports from national departments, municipalities had spent only 21.4 per cent by the end of the first quarter. However, municipalities receiving direct conditional grants reported first quarter aggregate expenditure of R2.6 billion or just 12.4 per cent of the R21.2 billion allocated to municipalities.
The Neighborhood Development and Partnership Subsidy Grant, Public Transport Infrastructure and Systems Grant, Municipal Drought Relief Grant and the Electricity Demand Side Management reflect spending levels of less than 10 per cent.
The amounts reported by the national department responsible for managing the 2010 FIFA World Cup related grants show spending in excess of 100 per cent in the first quarter of 2010/11 financial year, yet the expenditures reported directly by the municipalities are significantly lower. The reasons for this may be two fold: (a) the municipalities are reporting spending in excess of the conditional grant amounts to the responsible department to place pressure on National Treasury to fund the excess amounts they spent on hosting (note National Treasury has indicated very clearly that additional funding will not be provided), or (b) there are inconsistencies in the way the municipalities are reporting this information, which would need to be explored with them.
The expenditure of 13.2 per cent reported by municipalities for the first quarter period excludes the amounts that the metros may have spent in relation to the Municipal Infrastructure Grant (MIG Cities). In terms of Section 11(2)(b)(ii) of the Division of Revenue Act, 2010, metros are required to report on the implementation of their entire capital programme, and not specifically on the spending of the MIG cities grant. This is because the MIG cities grant is designed to supplement the capital budgets of the metros. Secondly, the EPWP incentive grant performance is also not reflected in the publication due to it's "after the event" performance nature.
A summary of key aggregated information is included in the tables in Annexure A.
The information released on National Treasury's website (www.treasury.gov.
b. High-level summary of revenue for 276 municipalities; and c. High-level summary of expenditure for 276 municipalities.
a. High level summary of revenue per function; and b. High level summary of expenditure per function.
Consolidation of revenue and expenditure numbers for each municipality in one file.
Detail per province per municipality.
Summary of Conditional Grant (CG) Information for all municipalities and per grant.
CG - Detail per province per Municipality.
h. Conditional Grant summary - Provinces; and i. Analysis of Sources of Revenue - 276 municipalities.
a. List of Non Compliance to Section 71 of the MFMA.
In the above table, it is evident that the total outstanding debt does not reconcile with the information submitted per customer group. These reporting discrepancies are noted but will be resolved with the municipalities in future reports.