Overstrand Executive Mayor, Ald Archie Klaas, tabled the Overstrand Municipal Draft Budget for the 2026/27 financial year on 31 March 2026 at a Special Council meeting in Hermanus, highlighting the Municipality’s commitment to balancing service delivery, cost management, and long-term planning amid a growing population and aging infrastructure.

• According to the
  2024 Socio-Economic Profile from the Provincial Treasury, the Overstrand
  population is growing at an annual rate of 1.8%, against a backdrop of the 2022
  STATSSA population estimate of 132 495. Consequently, existing water, road, and
  electricity networks are aging and under increasing pressure to meet this
  growing demand.
• Unfunded mandates, climate change and global tensions in the Middle East are increasing operational costs, like fuel, bitumen and possibly interest on borrowings, with the Municipality also spending more on overtime to respond to environmental emergencies and the prevention of illegal land occupations.

Draft budget in a nutshell:

The main focus this year is further progression towards cost-reflective tariffs, aligning the price residents pay with the actual cost of providing services.

The total proposed budget is R2.44 billion, comprising an operating budget of R2.197 billion and a capital budget of R242.7 million – a 2.7% increase from the previous year.

The capital budget prioritises repairs, maintenance, and basic service infrastructure. Capital projects are primarily funded through borrowing (52.7%), with grants (29.6%) and internal funds (17.7%) making up the remainder.

While the Municipality does not have control over escalating bulk electricity prices, it remains sensitive to the pressures faced by residents, particularly vulnerable households, as rising costs in bulk electricity, fuel and infrastructure maintenance impact service delivery.

Proposed tariff adjustments (Effective 1 July 2026)

To sustain reliable services and cover operational costs, the following increases are proposed:

• Property Rates: 5% (applied on the cent in the rand. The increase applies across all categories of properties, including residential, commercial and vacant erven)
• Refuse: 5%
• Sewer: 5%
• Water: 5%
• Electricity: 8.5%

It should be noted that the proposed increases were considered using a pre-war scenario and although it is trusted that the war will not be protracted, the effect thereof on fuel and fuel related products like bitumen, as well as possible increases in interest rates and inflation, will continue to put pressure on the budget of the municipality going forward.

Changes to Electricity Billing

The Municipality is continuing with year three of a four-year phase in plan for its Cost of Supply (CoS) model to make electricity billing fairer and more sustainable:

• Sliding Scale Ending: The current block tariff system is being phased out in year four of the CoS phased implementation plan in favour of a flat rate
• Capacity Charges: This charge, based on connection capacity, allows residents to choose a level that fits their household needs and budget.
• Customer Categories:
• Qualifying indigent households continue to receive free basic services, including a 70 kWh electricity allocation per month.
• Domestic and small business customers pay a basic charge, a capacity-based charge, and an energy charge (kWh cost) reflecting the full cost of supply.
• Large customers are billed using a Time-of-Use tariff aligned with Eskom’s Municflex structure.

These measures aim to ensure fair billing while protecting essential services and vulnerable households.

Operational Priorities

• Cost Containment: Strict adherence to 2019 Cost Containment Regulations ensures non-essential spending is minimised.
• Revenue Collection: Maintaining a minimum 98% collection rate target to keep the Municipality financially sustainable.
• Resilience Planning: Investments in natural areas and infrastructure, strengthen the Municipality’s ability to withstand environmental changes while safeguarding services.

Next Step

The draft budget will be presented to communities for public consultation. The Public Ward Committee meetings for the IDP/Budget Roadshow are scheduled from 13 to 20 April 2026 at 18:00, to be held at venues across the municipal area. The closing date for public comment is on 30 April 2026.

Residents can access the full draft budget on the municipal website, overstrand.gov.za > Documents > Budget and provide input before the final budget is approved at the end of May 2026.