Local government budgets 2009/10 financial year first quarter Local Government section 71 report
25 Nov 2009
The first quarter local government budget statement was released today by the National Treasury. The statement covers revenue and expenditure for the first three months of the 2009/10 municipal financial year, which ended on 30 September 2009. 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 30 October 2009. 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 first quarter of the 2009/10 financial year for 239 municipalities. The coverage of municipal financial information in terms of section 71 of the MFMA has dropped from 283 municipalities achieved during the fourth quarter of the 2008/09 financial year to 239 municipalities for the first quarter of 2009/10.
The budgeted figures disclosed are based on the 2009/10 adopted budget statements tabled in the various municipal councils during May and June 2009. In some municipalities the amount reported as the adopted budget differs substantially from the amount actual adapted by council. The area of work needs substantial attention by those municipalities.
Some of the notable trends that emerge from this information include:
The first quarter results for the 2009/10 municipal financial year (as at 30 September 2009) shows that aggregate spending by municipalities was R39,8 billion or 22.2 percent of their total adopted budget of R178,9 billion. Aggregate spending of the operating budget was reported as R33,2 billion or 23.6 percent of a total operating budget of R140,7 billion, while spending on the capital budget was 17.2 percent or R6,6 billion for the first quarter. The highest spending rate was achieved within the district municipalities, where 25 per cent of the total adopted budget was spent in the first quarter.
Aggregate revenue collections were slightly higher with municipalities collecting 26.2 percent of the total adopted revenue budget, or R50,6 billion of a total revenue budget of R192,9 billion. It was expected that revenue collection results for the first quarter would provide first indications of the effects of economic recession on municipalities.
However, revenue collection rates were higher than expected making the impact of the recession on municipal revenues difficult to estimate. The highest revenue collections were reported in the district municipalities where 43 percent of the adopted revenue budget was collected in the first quarter. The high collection rate for district municipalities in the first quarter could largely be as a result of transfers made by national government.
Total aggregated expenditure by metros was 21.8 percent or R25,7 billion of a total adopted budget of R117,8 billion. The highest spending rate of 25.6 percent was reported by the city of Johannesburg, followed by spending of 24.5 per cent in Ekurhuleni. The rate of spending by metros in the first quarter (21.8 percent) shows a close correlation with spending rates of 20.8 percent achieved in the first quarter of the previous financial year.
Metros collected R29,8 billion of their revenue at the end of the first quarter, or 23.1 percent of the total R128,9 billion adopted revenue budget. Revenue collection rates for metros have increased slightly from the 20.7 percent collection rate achieved in the first quarter of the previous financial year. The highest collection rate of 27.5 percent was reported by the city of Johannesburg whilst the lowest collection rate of 19.9 percent was reported by the city of Tshwane.
Aggregated capital spending by metros is R4 billion or 17.2 percent of the R23,4 billion total adopted capital budget for the 2009/10 financial year.
Aggregated operating expenditure by metros for water, electricity, sanitation and refuse removal for the first quarter reveals:
* Metros spent R2,7 billion on water or 17.1 percent of the total R15,7 billion appropriated for water in the operating budget, indicating a 4.1 percent increase from the first quarter of the previous financial year.
* By contrast, spending on electricity shows that metros spent R8 billion or 32.6 percent of the total R24,5 billion appropriated for electricity in the operating budget. This indicates a 29.9 percent from the previous year’s first quarter results.
* Spending on sanitation for the metros is R630 million for the first quarter or 16.9 percent of the total R3,7 billion appropriated for sanitation in the operating budget, reflecting an 13.5 per cent increase from the previous year.
* Aggregate spending by metros on refuse removal is R925 million or 20.4 percent of the total R4,5 billion appropriated for refuse removal. This represents an increase of 22.5 percent when compared to the first quarter of the previous financial year.
National consumer debt amounts to R53,3 billion as at 30 September 2009 (unaudited figures). Of this amount, metros are owed a total of R31,5 billion. This is an increase of R2,2 billion or 7.3 percent from the same period in the previous year. Contrary to popular belief that government departments are municipalities’ biggest defaulters, outstanding debt owed by government departments to municipalities is reported as 4.1 percent of total outstanding debt.
Consumer debts owing to secondary cities amount to R10,5 billion as at 30 September 2009 showing an increase of 14 percent or R1,3 billion from the corresponding period last year. As with the metros consumer debtors owing over 90 days constitute a very large proportion, comprising of R7,7 billion or 73.7 percent of the total amount outstanding.
Spending on repairs and maintenance by metros is on average 1.2 percent of their total adopted budgets.
The first quarter conditional grant report indicates expenditure performance by municipalities based on reports from the national departments responsible for administering the different grant funding. The information is also based on verifications received from municipal managers for the period July to September 2009.
A total of R21,9 billion was gazetted through the 2009 Division of Revenue Act, 2009 (Act No.12 of 2009) as conditional allocations for local government. This includes direct and indirect grants but excludes the unconditional grant allocation (equitable share) which amounts to R23,8 billion for the 2009/10 financial year. Therefore total allocations to local government for the 2009/10 financial year amounts to R45,7 billion. Direct conditional grants allocated to municipalities amounts to R19,1 billion for the 2009/10 financial year.
Of the R21,9 billion allocated to municipalities for 2009/10 financial year, R8,5 billion was transferred as at September 2009. According to expenditure reports provided by the national departments only 31.1 percent of this amount was spent against the total conditional grant allocated as at 30 September 2009.
An analysis of spending on for the first quarter indicates that the 2010 World Cup stadiums development grant remains the best performing programme in both the previous and current financial year with expenditure of 64.6 percent being achieved in this quarter. Spending on public transport infrastructure and systems grant and the municipal infrastructure grant was 58.8 and 25.4 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:
High level summary of revenue for 239 municipalities
High level summary of expenditure for 239 municipalities
Consolidation of revenue and expenditure numbers for each municipality in one file
* Summary per function (electricity, water, etc):
High level summary of revenue per function
High level summary of expenditure per function
High level summary of repairs and maintenance
* Detail per province per municipality:
* Summary of Conditional Grant (CG) Information:
* Conditional Grant, detail per province per municipality:
* Summary information (section 71):
summary; first quarter, metros
Summary; first quarter, top 21 municipalities
Summary; first quarter, provinces
Analysis of sources of revenue
* Non compliance:
List of non compliance to Section 71 of the MFMA
All information is available on the National Treasury’s website, that is: 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. A summary of key aggregated tables i can be found as part of annexure A at:
Tel: 012 315 5009
Issued by: National Treasury
25 November 2009
Issued by: National Treasury
25 Nov 2009
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