The National Treasury has today published, on its website the operating and capital budgets of 278 municipalities as adopted by their respective councils.
These budgets give an overview of expected revenue and expenditure trends in local government over the next three years, referred to as the 2013/14 Medium Term Revenue and Expenditure framework (MTREF). The revenue and expenditure numbers are aggregated from the annual budgets that municipal managers are legally required to submit to the National Treasury and the relevant provincial treasury.
The published information is presented in a variety of ways, including aggregated municipal budget totals for the 2013/14 financial year and over the medium term period, information per category of municipality and information per province.
Highlights include:
- In aggregate, budgeted revenue for 2013/14 is R284.8 billion, which is expected to increase to R301.0 billion in 2014/15 and R325.9 billion in 2015/16.
- Total municipal expenditure in 2013/14 is estimated to be R306.8 billion, increasing to R322.2 billion in 2014/15 and R345.1 billion in 2015/16. Expenditure for 2013/14 is 9.1 per cent higher than the 2012/13 MTREF.
- In the 2013/14 financial year, a net deficit of R637.6 million is expected, a position that is expected to improve significantly to reflect surpluses of R1.5 billion and R4.8 billion respectively in the two outer years of the MTREF period.
- Municipal operating expenditure on the trading services consisting of water, electricity, waste water management and waste management is budgeted to increase from R120.9 billion in 2012/13 to R131 billion in 2013/14. In 2013/14 this equates to just over half the total operating expenditure of municipalities.
- Bulk purchases of electricity and water total R79.1 billion of the aggregated operating expenditure of R250.3 billion or 31.6 per cent. Bulk purchases are expected to grow to R92 billion by 2015/16 representing 32.6 per cent of total operating expenditure; bulk purchase of electricity from Eskom is a significant contributing factor to this growth.
- Reporting on operational repairs and maintenance figures has now been institutionalised as part of Section 71 in-year reporting. R14.1 billion will be allocated in 2013/14 to repairs and maintenance of assets from operating expenditure. This will increase to R15.1 billion in 2014/15 and R16.4 billion in 2015/16.
- Capital expenditure has increased by 8.9 per cent compared to the 2012/13 MTREF. Of the overall budget of municipalities, capital expenditure in aggregate represents 18.4 per cent in 2013/14, 18.2 per cent in 2014/15 and 18.1 per cent in 2015/16.
- Total capital expenditure for 2013/14 is R56.4 billion and comprises R25.9 billion for trading services (electricity, water, waste water management and waste management). Expenditure on the four trading services will increase to R27.2 billion and R29.7 billion in the outer years of the MTREF.
- The 2013/14 capital budget reflects a R39.1 billion investment in new infrastructure which is 69.3 per cent of the total capital budget. Investment in the renewal of existing assets will be approximately R17.3 billion or 30.7 per cent of the capital budget.
The National Treasury publishes local government MTREF information on an annual basis. Regularly published budget information enables communities to hold their municipal councils to account. Information is also used by National Treasury as the basis for the In-year Management, Monitoring and Reporting System for Local Government. The Section 71 reports published by the National Treasury give an account of actual revenue collection and spending by municipalities per quarter against their budgeted figures.
To improve the quality of reporting, the Municipal Budget and Reporting Regulations promulgated in 2009 prescribed new budget reporting formats for municipalities. In terms of the 2009 regulations, municipalities must submit their 2013/14 MTREF budgets in the prescribed A1 Schedules as per the regulations. Improvements in reporting this year can be attributed to the collective efforts of the National Treasury and provincial treasuries to work with municipalities to improve both budgeting and reporting.
All 278 municipalities conformed to the prescribed reporting formats as per the Municipal Budget and Reporting Regulations. Also the number of municipalities whose electronically submitted budgets reconciled with the actual budget approved by their councils has increased. While only 149 municipalities managed to achieve this reconciliation last year, this year the budgets of 200 municipalities were verified as reconciling. Efforts will continue to ensure all municipalities meet requirements and to further improve the quality of budget information.
A detailed document is available on the National Treasury website.
