City Of Johannesburg Tables Its R65 billion Draft Budget

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Photo: SouthernCourier

THEBE MABANGA

THE CITY of Johannesburg has tabled for comment its draft budget for the next two years, proposing an 8.5% increase in revenue from R 61.7 billion this year to R 64.8 billion in the 2020/2021 financial year, which starts in July.

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The City proposes to raise expenditure from R 59, 9 billion to R 62 billion, an increase of 5.7%.

Overall expenditure, which includes internal expenditure, will rise by 5.1% from R67.8 billion to R70.5 billion.

The council expects to be left with surplus of R2.7 billion and when grants are included, this rises to R 5.3 billion.

The draft budget was tabled alongside the city’s Integrated Development Plan and tariff increases proposals. Residents have until 23 June to submit comment online or by delivery to regional offices.

The City proposes an average rate increase of 4.8% for the next two years, slightly down from 4.9%.

The City notes that some customers pay more than the average increase while others pay less.

Electricity tariffs are the most volatile and are expected to increase by 5.2% in 2020/2021 and rise by 10% in 2022/2023.

For the current financial year, electricity tariffs rose by 8.1% after rising by 13% in the 2019/2020 financial year.

Electricity tariffs are based on increases by Eskom which are approved by the National Energy Regulator of South Africa (Nersa). Water and Sanitation tariffs are each expected to increase by an average 8.6% over the next three years. Refuse tariffs are expected to rise by 4.7%.

Revenue electricity from electricity contributes the largest share at 27.6% and is expected to raise R16.7 billion in the 2020/ 2021 financial year.

It is followed by revenue from property rates at 21.6% and contributing R14 billion.

Operating grants, such as the Municipal Infrastructure Grant from central and provincial grants account for 16.5% or R 11.2 billion.

Water accounts for 13.8% and contributes R 9.2 billion.

On the expenditure side, bulk purchases of water and electricity account for the largest share at 31.8% or R18.9 billion in 2020/2021.

This is followed by employee related costs at 26.9% or R 17 billion which is separate from remuneration from councillors, which accounts for 0.3% or R 205 million.

The city expects to spend around R 5 billion a year on maintenance for each of the next three years.

This is for storm water drain, road, electricity, and Information Technology infrastructure.

For the 2020/ 2021 financial year, the city proposed capital expenditure of R 8.4billion.

This is made of R2.6 billion of loan funding from bond market.

This is likely to ne affected by recent downgrades suffered by the country’s overall rating. Surplus cash makes up R3.1 billion of capex budget while grants and contributions amount to R 2.6 billion.

31% of Capex budget is funded by The City’s cash budget while 31% is from the City’s loans.

National government contributes only 4.5% or R 381 million while the province contributes 22% through instruments such as the Urban Settlement Development Grants.

(Compiled by Inside Metros staff)

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