Summary
1. National Treasury has today released local government’s budget statement for the second quarter of the 2010/11 financial year. The statement covers revenue and expenditure as well as spending of conditional grantsfor the period 1 July to 31 December 2010. It is available on the National Treasury’s website: www.treasury.gov.za.
2. 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 30(3) of the 2010 Division of Revenue Act. The budgeted figures shown are based on the 2010/11 budgets approved by municipal councils during May and June 2010.
3. 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 over municipalities, and identify possible problems in implementing municipal budgets and conditional grants. The information will also be of interest to policy makers, researchers, sector specialists and academics with an interest in local government. It is also envisaged that regularly published budget implementation information will empower communities to hold their Municipal Councils accountable.
4. All information in this statement is based on the section 71 MFMA reports that Municipal Managers and Chief Financial Officers were required to sign and submit to the National Treasury by 11 February 2011. Any queries on the figures in the statement should therefore be referred to the relevant Municipal Manager or Chief Financial Officer. Queries on conditional grants may be referred to the national department responsible for administering the grant.
5.The number of municipalities that submitted reports increased to 282 in the second quarter of 2010/11 from 276 in the first quarter of 2010/11. This increase in coverage can be partly attributed to increased capacity building by National Treasury and the provincial treasuries.
Highlights
Aggregated trends
As at 31 December 2010, municipalities had in aggregate spent 42.6 percent or R99.5 billion of the R233.7 billion total approved budget. The total revenue budget amounted to R244.5 billion for 2010/11, of which aggregated billing accounted for R116.9 billion or 47.8 percent.
Metropolitan municipalities had billed R63.1 billion or 44.9 percent of their total revenue budget of R140.6 billion by the end of the second quarter. Ekurhuleni had billed the highest proportion of its revenue at 48.5 percent, followed by City of Johannesburg at 46.1 percent.
The aggregated capital budget for all municipalities for 2010/11 is R41.1 billion, of which R13.1 billion or 31.9 percent had been spent by the end of the second quarter. The aggregated capital budget of metropolitan municipalities amounted to R19.6 billion, of which R5.8 billion or 29.9 percent had been spent by 31 December 2010.Most metros had spent less than 30.0 percent of their capital budget in the second quarter. The City of Tshwane had the lowest capital spending rate at only 20.8 percent, with expenditure at Ekurhuleni Metro not far behind at 25.0 percent.
Aggregated municipal consumer debts amounted to R62.3 billion as at 31 December 2010. Of this, households accounted for the largest component at R38.3 billion or 61.9 percent of the total and government accounted for R3.1 billion or 5.1 percent.
Metropolitan municipalities were owed a total of R34.6 billion as at 31 December 2010.This is an increase of R3.3 billion or 10.6 percent overthe same period last year. The biggest percentage growth from the previous year is in the City of Johannesburg, where it increased by 19.8 percent or R1.8 billion. Ekurhuleni Metro’s debtors book increased by 12.6 percent or R973 million.
Secondary cities were owed R11.6 billion,an increase of R1.4 million or 1 percent from the corresponding period last year.Households accounted for R8.4 billion or 71.7 percent of the total.
The creditor age analysis shows that municipalities owed R10.7 billion as at 31 December 2010. This is R400 million more than the R10.3 billion owed at the end of the first quarter of 2010/11. North West hadthe highest percentage of creditors outstanding for more than 90 days at 59.3 percent, followed by the Northern Cape at 45.8 percent, Limpopo at 40.1 percent and Free State at 27.1 percent.The creditor age analysis results differ vastly from quarter to quarter.
Conditional grants
The Division of Revenue Act, 2010 (Act No.1 of 2010) allocated R51.9 billion in transfers to local government.This consists of the unconditional transfer (Equitable Share) of R30.2 billion and conditional transfers of R21.7 billion. The conditional transfers consists of direct conditional grants to municipalities of R17.9 billion and allocations-in-kind of R3.8 billion. It should be noted that the direct conditional grant amount of R17.9 billion does not include the MIG cities to metropolitan municipalities as they are required to report performance on the entire capital programme.
By the end of the second quarter national departments administering conditional grants had transferred R12.7 billion or 71.3 percent of the direct conditional grants to municipalities.According to expenditure reports from national departments, municipalities had spent only 48 percent by the end of the second quarter.However, municipalities receiving direct conditional grants reported second quarter aggregate expenditure of R5.9 billion or just 33.2 percent of the R17.9 billion conditional grants allocated to municipalities.
The Local Government Financial Management Grant, Rural Transport Grant and Water Services Operating and Transfer Subsidy Grant reflect spending levels of more than 50 percent while the Neighbourhood Development Partnership Grant, Public Transport Infrastructure and Systems Grant, Electricity Demand Side Management Grant and Municipal Drought Relief Grant reported expenditures of less than 25 percent at the end of December 2010.
The expenditure of 33.2 percent reported by municipalities for the second quarter period excludes the amounts that the metros may have spent in relation to the Municipal Infrastructure Grant (MIG Cities). In terms of Section 11(2)(b)(ii) of the Division of Revenue Act, 2010, metros are required to report on the implementation of their entire capital programme, and not specifically on the spending of the MIG cities grant. This is because the MIG cities grant is designed to supplement the capital budgets of the metros. Secondly, the EPWP incentive grant performance is also not reflected in the publication due to it’s “after the event” performance nature.
A summary of key aggregated information is included in the tables in Annexure A [PDF].
Structure of information released
The information released on National Treasury’s website (www.treasury.gov.za) as part of this process includes the following:
- Municipal Budget Statements:
b. High-level summary of revenue for 282 municipalities; and
c. High-level summary of expenditure for 282 municipalities.
- Summary of revenue and expenditure per function (electricity, water, etc):
a. High level summary of revenue per function; and
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.
- Summary of Conditional Grant (CG) Information for all municipalities and per grant.
- CG - Detail per province per Municipality.
- Section 71 summary information for the first quarter:
a. Summary of total monthly operating expenditure – 282 municipalities;
b. Summary of total monthly capital expenditure –282 municipalities;
c. Summary – Metros;
d. Conditional Grant summary – Metros;
e. Summary – Top 21 municipalities;
f. Conditional Grant summary – Top 21 municipalities;
g. Summary – Provinces;
h. Conditional Grant summary – Provinces; and
i. Analysis of Sources of Revenue –282 municipalities.
- Non Compliance:
a. List of Non Compliance to Section 71 of the MFMA.
