KNYSNA NEWS - Knysna municipality has approved a capital budget of R157.9-million for the 2020/2021 financial year, which translates to a projected R444.1-million over the three-year Medium Term Revenue and Expenditure Framework (MTREF) period.
The draft operating budget for the 2020/2021financial year amounts to R1 036-billion – an increase of R62.6-million, or 6.4%, from the last adjusted budget for 2019/2020.
Rates would increase by 3%, as would water services and sanitation services tariffs, while refuse removal would increase by 12%.
Electricity will be approved in terms of energy regulator Nersa's guidelines.
Cash-flow crunch
Mayor Ricky van Aswegen said the municipality’s cash-flow crunch combined with the effect of the Covid-19 lockdown created one of the most difficult environments to date to draft a budget in.
“There were a number of factors that influenced the budget. The municipality’s dire financial situation and increased pressure on an already depressed economy by the national lockdown had a compounding negative effect and increased the universal challenges experienced by all spheres of government," he said.
“The aim of the budget is to achieve specific targets for enhanced liquidity and cash flow, enabling us to provide uninterrupted basic services. To sustain this we had to balance revenue with expenditure, which directly impacts on tariff increases in difficult and trying times,” said Van Aswegen.
He added that a reduction in municipal property rental up to a maximum amount of R50 000 would also be considered.
Van Aswegen also stated that the municipality is not in the position to consider debt relief for ratepayers without it impacting on service delivery. "Balancing the budget has not been easy. We had to ensure that we maintain service delivery while minimising tariffs and increases at a time when costs are increasing. After all the consultations which included Provincial Treasury, we were happy with the final product which we believe will in some way alleviate the pressure and suffering faced by the business sector and community at large.”
'Many variables'
ACDP councillor Ian Uys said this was not a strong budget, due mainly to past mistakes and the prevailing economic conditions. “There are many variables which were not prevalent before, Covid-19 being the main one. While projected income has shrunk significantly, the same cannot be said for expenses.
"Salaries, for example, is more of a fixed than a variable expense due to legislation, however steps have been taken to freeze positions and not employ more staff. As this makes up over 30% of expenses, it has a significant effect on our budget,” he said.
Uys noted that financial mismanagement in the past has impacted dramatically on the municipality's cash flow. “It is imperative that steps be taken immediately for province to refund capital expenditure for housing which was erroneously paid by Knysna. Our new mayor has promised to get a firm grip on expenditure and, with the new acting municipal manager, to cut expenses to the bone. With a more vigorous collection system it will go a long way to solving our present predicament,” he said.
The Knysna Ratepayers' Association said this week they still have to come to a unified decision in terms of their stance on the budget.
The DA's Knysna constituency head Dion George was asked for comment, but he had not responded by the time of going to print.
Samwu demands
Meanwhile, Knysna municipal workers and representatives of the SA Municipal Workers' Union (Samwu) picketed outside the municipal offices on Tuesday this week demanding for salary increases, among others. This is after Samwu members on 4 June had handed a memorandum of demands to deputy mayor Aubrey Tsengwa amid concerns about job security in a time when the municipality was undergoing a financial crisis.
"We demand a risk allowance of R3 000, as well as a pay increment from next month," Samwu Knysna branch chair Shaun Kralo said this week.
Responding to Samwu's demands earlier this month, the deputy mayor stated that the municipality currently cannot afford salary increments for the upcoming financial year amounting to R11-million. "It is confirmed that the application for exemption from salary increases for the 2020/2021 financial year has been approved and submitted to SA Local Government Bargaining Council for consideration given our current financial crisis. It is further confirmed that the former acting municipal manager Gratz had engaged both unions on the predicament of the municipality and intended application,” he said.
“We have two scenarios in this regard: if salary increases are implemented we stand a chance of retrenchments as we cannot sustain increased employee costs moving forward, and if the increases are not implemented we stand a chance of retaining the current workforce,” Tsengwa explained in his response.
Tsengwa said the municipality had applied for a R71-million loan to cover the costs that they have already incurred on projects which were meant to be funded through a loan.
Responding to concerns that council will be put under a Section 139 provincial intervention, Tsengwa said the municipality distances itself from rumours spread on social media. “Council has not approved the implementation of Section 139, however, by the same token it is not guaranteed that council will be able to continue honouring its financial obligations, should this not take place."
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