KNYSNA NEWS - A draft budget for the 2020/21 financial year was adopted by Knysna Municipality in a special council meeting on 26 March with an operating budget of more than R1-billion.
The budget of R1 052 092 283 represents an increase of R78 647 000 million, or 7.48%, when compared with the last adjusted budget for 2019/20 which was R973 444 903.
Residents are set to face increases for basic services as tariff increases include 6.5% each for sewerage charges and water services, 9.1% for electricity services, 12% for refuse removal, and property rates starting from 6.5% upwards depending on the value of the property.
Cost drivers
Among the budget costs drivers are:
- An increase of 9.1% in the purchase of electricity from Eskom;
- A regional landfill site and transporting waste to Mossel Bay;
- Adhering to the department of water affairs' standards for operating water purification and wastewater treatment plants;
- Inflationary pressure and the general increase in the price of goods and services;
- Recent and expected (estimated) fuel price increases and other production costs;
- Operational requirements to ensure service delivery standards are complied with, referring specifically to electricity, roads, water, wastewater and waste removal.
Council approved that 50 electricity units be provided to indigent households per month. Indigent residents also receive 6kl of water per month, free refuse removal and free sanitation. Households with an income base below a determined threshold of R5 400 will receive a 100% subsidy and child-headed households are furthermore subsidised in the same manner as a 100% qualifying indigent household.
Property rates
In respect of property rates, properties below R750 000 will receive the first R85 000 value of the residential properties as exempted. All other properties above R750 000 will receive the first R350 000 value of the residential properties as exempted. For both categories of properties, the amount will be additional to the first R15 000 exempted in terms of the Municipal Property Rates Amendment Act (MPRA) section 17(1).
Presenting the budget in council, deputy mayor Aubrey Tsengwa said the total operating grants to be received from provincial treasury for 2020/21 comprises R176.2-million.
"The three-year medium-term revenue and expenditure framework (MTREF) capital budget is R404.8-million," he explained. The capital budget is funded from various sources (in the forms of grants and loans) of which the capital replacement reserve (money input from the municipality itself to replace stuff) is the lowest/smallest contributor. Tsengwa added that the capital budget for 2020/21 is R141.6-million, and for the following two financial years the amounts are R132.1-million and R131.0-million respectively.
External loans
The external loans to fund the capital budget will be as follows: in 2020/21 a R73.3-million new proposed external loan for various projects, 2021/22 a R54.7-million new proposed external loan for various projects and 2022/23 a R55-million new proposed external loan for various projects," Tsengwa said. The 2020/21 MTREF capital budget is expected to deplete the capital replacement reserve (CRR) over the next three years with only pocket change left according to Tsengwa. "It is estimated the CRR's balance will be only R10-million at the end of 2022/23," he noted.
Although an amount of R23-million for 2020/21, R20-million for 2021/22 and R24-million for 2022/23 financial years is budgeted as a contribution to the cash reserve ratio over the MTREF, the municipality is budgeting for a deficit as the depreciation charge is not expected to be fully cashed-back. Tsengwa detailed the projected budgeted deficit for the three-year MTREF period starting 2020/21 as being R15.3-million, R62.4-million and R81.1-million respectively.
"The repairs and maintenance expenditure budget for 2020/21, 2021/22 and 2022/23 is R95.9-million, R98.8-million and R101.8-million respectively," Tsengwa said.
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