KNYSNA NEWS - Knysna Municipality is tightening its belt severely after the municipality was plunged from a more than R50-million projected cash surplus in November last year, to a projected cash deficit of more than R200-million recently.
At a special council meeting last week, the council approved cost-cutting measures to alleviate what has been described as a major "cash-flow crisis", which the municipality has attributed to unrealistic budgeting, poor financial controls, high outstanding debtors and an increased capital budget.
The town's acting municipal manager Dr Michele Gratz took a no-nonsense approach to the problem and presented a short-, medium- and long-term plan to lessen the pressure that the cash-strapped municipality is currently under.
'Necessity for short-term loan'
To counter the cash-flow problems, Gratz said they need to obtain a short-term loan or overdraft facility; freeze all unfilled posts; and curtail capital projects funded from municipal coffers.
She added that travelling and subsistence costs, overtime and catering should also be curtailed.
Gratz also said they would need to implement strict budget control measures; strict credit control procedures; and efficient collection of grants that are outstanding.
In the medium term, Gratz said a proper budget procedure for the 2020/2021 budget year needs to be issued; performance targets need to be revised; and municipal activities, rules and procedures need to be consistent with relevant policies, legislation and bylaws.
Other medium-term goals include taking up loans at the beginning of the financial year and not bridge financing; the revision of all employee-related policies; and the revision of organisational structure in line with service delivery and within the affordability of the municipality.
'Tariffs need to be revised'
Likely to hit the ratepayers' pockets, Gratz said tariffs need to be revised to be in line with actual costs.
For the long term, Gratz suggested that a financial recovery plan should be designed with the purpose of improving service delivery.
Council also voted in favour of a recommendation from Gratz to stop the payment of a 20% scarce-skills allowance to the municipal manager and directors with immediate effect, and instructed her to recover all amounts paid since inception. In her recommendation she said she received notice from the office of MEC Anton Bredell that the payments are unlawful, and that he had launched a high court application against the municipality. "Provincial Treasury also advised that these payments are unlawful. At a cost of over R117 000 per month, our cash-flow crisis and a pending court order against us, there was no other option than to cease these payments," she said.
The annual grant-in-aid proposal was presented to council for approval at the meeting. Gratz said council noted the application, but decided to hold back with the allocations until the municipality's cash flow has improved.
'Gratz has stopped downward slide'
In the meantime, the Knysna Ratepayers' Association (KRA), who highlighted the possibility of Knysna heading towards a cash crisis last year, welcomed the cost-cutting measures.
"In a little more than a week Dr Gratz has achieved more than her predecessors accomplished in years. More importantly, she has stopped the downward slide Knysna has been experiencing since 2007. Although that slide commenced gradually, it has accelerated sharply in recent years," the KRA said in a statement.
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