Summary
The third quarter local government budget statement was released today by the National Treasury. The statement covers revenue and expenditure for the first 9 months of the 2009/10 municipal financial year, which ended on 31 March 2010.
The publication also includes information on the spending of local government conditional grants. The statement is available on the National Treasury's website: http://www.treasury.gov.za.
National Treasury publishes this information in terms of section 71 of the Municipal Finance Management Act, 2003 (Act No. 56 of 2003) (MFMA), and in terms of section 44(3) of the 2009 Division of Revenue Act.
This information, referred to as the in-year management, monitoring and reporting system for local government (IYM), will enable provincial and national government to exercise oversight of municipalities, and identify possible problems in the implementation of municipal budgets and conditional grants.
All information in this publication is based on the section 71 MFMA reports that each municipal manager and chief financial officer were required to sign and submit to the National Treasury by 7 May 2010.
Therefore, any queries on the budget, revenue or expenditure figures reflected in the statement must be referred to the relevant municipal manager or chief financial officer. Queries on conditional grants may be referred to the relevant transferring official of the national department responsible for administering the grant.
The information released with this press statement aggregates the municipal financial performance information for the third quarter of the 2009/10 financial year for 280 municipalities.
The coverage of municipal financial information in terms of section 71 of the MFMA has increased from 239 municipalities published for the first quarter and 274 for the second quarter of the 2009/10 financial year to 280 municipalities for the third quarter of 2009/10.
The budgeted figures disclosed are based on the 2009/10 adjusted budget statements tabled in the various municipal councils during January and February 2010.
Some of the notable trends that emerge from this information include:
Highlights:
At 31 March 2010 (third quarter YTD results for the 2009/10 financial year), municipalities in aggregate had spent 65.7 percent or R135 billion of the R205.6 billion total adjusted budget.
On the revenue side, they have collected, in aggregate, 70.7 percent or R153.3 billion of the R216.8 billion total adjusted revenue budget.
Metropolitan municipalities have collected 66.7 percent of their revenue by the end of the third quarter or R87.3 billion of the total adjusted budget of R130.7 billion. eThekwini has collected the highest proportion of its revenue at 70.1 percent with Cape Town following at
68.2 percent.
Of the aggregated adjusted capital budget amounting to R24.9 billion for metropolitan municipalities, R13.9 billion or 55.8 percent has been spent as at 31 March 2010. The highest percentage spent is by eThekwini at 76.7 percent or R4.6 billion out of a R5.9 billion adjusted capital budget, followed by City of Johannesburg at 60.3 percent or R3.3 billion out of a R5.5 billion adjusted capital budget and Cape Town at 52.6 percent or R2.9 billion of a R5.6 billion adjusted capital budget. The lowest capital spending is in the Ekurhuleni Metro at 31.5 percent.
National consumer debts amount to R56.8 billion as at 31 March 2010 (unaudited figures) while R290 million in bad debts has been written off. Metropolitan municipalities are owed a total of R30.6 billion as at 31 March 2010. This is an increase of R219 million or 0.7 percent from the same period the previous year.
The biggest growth compared to the same quarter in the previous year are in eThekwini at 14.4 percent or R613 million, Cape Town at 14.1 percent or R599 million and Ekurhuleni Metro at 12.8 percent or R858 million.
Consumer debts owing to secondary cities increased from R11.5 billion in the second quarter to R11.9 billion as at 31 March 2010 and have increased from R10.7 billion to R11.9 billion or 11.2 percent from the corresponding period last year.
As with the metropolitan municipalities, consumer debtors over 90 days constitute a very large proportion, comprising of R9.5 billion or 79.8 percent of the total debt outstanding.
The creditor age analysis shows R8.1 billion is owed by municipalities as at 31 March 2010. Compared to the R8.3 billion reported in the second quarter of 2009/10, there was an overall decrease of R2 million.
Mpumalanga has the highest percentage of creditors outstanding for more than 90 days at 56.1 percent, followed by North West at 43.3 percent, Free State at 38.1 percent and Northern Cape at 20.2 percent. The creditor age analysis results differ vastly from quarter to quarter. The rest of the provinces' creditors outstanding for more than 90 days are lower than 12 percent.
To align the required electronic reporting with the municipal budget and reporting regulations, repairs and maintenance now forms part of the asset management reporting.
This will assist to eliminate the distortion by under-reporting of repairs and maintenance due to classification discrepancies when municipalities capture these expenditures.
While the new budget formats begin to deal with this problem, it will only be fully resolved once there is a uniform municipal standard chart of accounts in place. Municipalities will start to use these new reports on 1 July 2010 for the new municipal financial year 2010/11.
Conditional grants:
As far as conditional grants are concerned, R21.9 billion was originally gazetted through the 2009 Division of Revenue Act (Act No.12 of 2009) for local government for both direct and indirect grants. However, this amount does not include the unconditional grant (equitable share) amounting to R23.8 billion which brings the total amount allocated to local government to R45.7 billion. Direct conditional grants to municipalities amounted to R19 billion for the 2009/10 financial year.
These allocations have since been adjusted in line with the December adjustments gazette reflecting additional allocations, new allocation, re-allocations, rollovers and technical adjustments to local government spheres. These adjustments were done in terms of sections 6(3) and 37 and re-allocations in terms of Section 29 of the 2009 Division of Revenue Act.
To date, of a revised total of R22.2 billion allocated to municipalities for 2009/10 financial year, an amount of R19.3 billion was allocated as direct conditional grants of which R18.4 billion was transferred as at 31 March 2010. According to expenditure reports provided by the national departments only 72 percent was spent against the total conditional grant allocations.
The spending analysis for the third quarter indicates that the 2010 FIFA World Cup stadiums development grant remains the best performing programme in both the previous and the current financial year with expenditure of 93.8 percent for this third quarter, followed by public transport infrastructure and systems grant and water services operating and transfer subsidy grant with expenditure of 69.8 and 60.5 percent respectively.
Structure of information released:
The information released on National Treasury's website as part of this process includes the following:
* Press release: this document
* Municipal budget statements:
a. Cash flow closing balances as at 31 March 2010
b. High level summary of revenue for 280 municipalities
c. High level summary of expenditure for 280 municipalities
* Summary per function (electricity, water, etc):
a. High level summary of revenue per function
b. High level summary of expenditure per function
* Consolidation of revenue and expenditure numbers for each municipality in one file
* Detail per province per municipality:
a. Eastern Cape
b. Free State
c. Gauteng
d. KwaZulu-Natal
e. Limpopo
f. Mpumalanga
g. Northern Cape
h. North West
i. Western Cape
* Summary of conditional grant (CG) information:
a. Consolidated conditional grant information for all municipalities
b. Per programme
* Conditional grant: detail per province per municipality:
a. Eastern Cape
b. Free State
c. Gauteng
d. KwaZulu-Natal
e. Limpopo
f. Mpumalanga
g. Northern Cape
h. North West
i. Western Cape
* Summary information (section 71):
a. Summary: third quarter, metros
b. Conditional grant summary: third quarter, metros
c. Summary: third quarter, top 21 municipalities
d. Conditional grant summary: third quarter, top 21 municipalities
e. Summary: third quarter, provinces
f. Conditional grant summary: third quarter, provinces
g. Analysis of sources of revenue: third quarter, all municipalities
h. Summary of total monthly expenditure: third quarter, all municipalities
* Audited results for 2008/09
a. Over and under spending: audited outcomes 2008/09, all municipalities
b. Unauthorised expenditure: audited outcomes 2008/09: all municipalities
* Non compliance:
a. List of non compliance to section 71 of the Municipal Financial Management Act (MFMA)
All information is available on the National Treasury's website at http://www.treasury.gov.za.
This information will assist policy makers, researchers, sector specialists, elected representatives, academics and those responsible for implementation. The MFMA envisages that regularly published budget implementation information will enable and empower communities to hold their municipal councils accountable.
Enquiries:
Jan Hattingh
Tel: 012 315 5009
E-mail: Jan.Hattingh@treasury.gov.za.
Issued by: National Treasury
27 May 2010
