Council Approves Municipal Budget for 2023/2024

Council Approves Municipal Budget for 2023/2024

The Overstrand Municipal Budget for the 2023/24 financial year was approved by Council on Wednesday, 31 May 2023.

The Council adopted it by a vote of 22 in favour to the ANC’s four abstentions despite indicating their support for the budget.

The new municipal budget and tariffs and revised Integrated Development Plan (IDP) will be effective from 1 July 2023 to 30 June 2024.

Overstrand Executive Mayor, Dr Annelie Rabie, warned that it is going to be a tough year.  She cautioned about the cost of supply of electricity that we need to implement this time next year. “Our electricity rates are not going to follow the known format and it is not going to be nice”.

Mayor Rabie requested councillors to temper expectation of voters: “It is no use getting angry with us. We only have so much money.”

“Our Capital Project needs far exceed our capacity to generate sufficient own funding. Whilst we would like to tap into the Infrastructure Fund of National Government, their baseline single project value is R1 billion. In addition to that, it must be a single project and not a collective of capital projects,” the Mayor said.

“We have applied to this fund for basic services upgrades, but we were declined. We then thought that Schulphoek Development would meet the bar, but that also, at this time, is below R1 billion”.

In addition, Wards 9 and 10’s infrastructure need to be improved “because it is a critical matter”. The Mayor said we have not increased our ‘yellow fleet’ (honey suckers) or staff compliment in that area.

“We will have to find money to modernise pipelines, buy honey suckers and rollers for roads, etc. I would like to suggest we tackle Betty’s Bay (Ward 10) first so that we can do pipe replacement for the whole area, once we find the money,” she added.

Some of the bigger concerns include:

  • Impact of loadshedding on municipal services and economic growth – The budget surplus for electricity services that deteriorated from 5.36% to 4.89% due to the loadshedding impact;
  • The cost of electricity one year from now in line with the cost of supply;
  • A fleet of deteriorating vehicles and machinery; and
  • Infrastructure equipment that is not getting cheaper.

In her budget speech, Mayor Rabie said the economic impact of the pandemic of 2020, which resulted in many businesses closing down, job losses and hardship for especially the self-employed, is still being felt three years later and thus the current budget is in fact just a continuation of the previous years marked by the challenge of combatting said economic impact.

She reminded the Council that caution and stringent measures were implemented during budget process(es) to contain tariff increases for municipal services to alleviate some of the financial pressure as financial sustainability is the key driver of effective service delivery and attraction of investment.

In addition, the Municipality was confronted since February 2022 with skyrocketing oil prices, which caused petrol and diesel prices to rise drastically over the past year.

Mayor Rabie said the Budget Steering Committee received 28 comments from the community as well as other stakeholders. She said very few comments dealt with the essence of unhappiness with the budget per se. “There were a lot of personal attacks and telling us how bad we are – but the essence of why the budget is not acceptable, was not forthcoming”.

The Strategic Integrated Municipal Engagement (SIME) process as co-ordinated by the Provincial Treasury, is an important conformance process to ensure compliance with the Municipal Finance Management Act (MFMA), the Municipal Systems Act, the Municipal Budget and Reporting Regulations, MFMA Circulars and Environmental and Development Planning Legislation and Guidelines.

“Take all that and try and compile a budget,” the Mayor said.

The findings of this conformance assessment are detailed in the documentation included in the budget report.

The draft revenue projections for 2023/24 were also reviewed with the electricity tariff increases for municipal consumers  at 15.10%. NERSA agreed over 18% to Eskom – that means an additional 3.7% has to be accepted and absorbed by this Council.

The recommendation for the increase in water tariffs, specifically related to the water tariff sliding scale applied, was based on the decision of the Budget Steering Committee of the Municipality considering comments received in response to the Draft Budget. The recommendation of sliding scale increases now represents a less steep increase in the brackets as previously proposed.

The Mayor then briefly spoke about the increased water tariff sliding scale (range from 6.5% to 7.5%). The steeper increase in water sliding scale tariffs exceeding 6.8%, will be applicable on consumption above 18 kl per month, encouraging sparingly consumption of a limited resource. 

She stated that the impact of load-shedding on the sewerage water and storm water network cannot be over-emphasised.

“The more water and sewage we use, the more under stress the network is when we have 4 and 6 hours load shedding. Our systems cannot carry that”.

Addressing the topic of the property valuation roll, Mayor Rabie said ± 1 800 objections were lodged. Very few of the objections proved the valuations incorrect, most were due to the fact that residents mentioned they could not afford the higher rates to follow.

She went on to explain that a new, discounted property rate in the rand is now applicable for the calculation and levying of property rates.

To explain the impact, the following example:

  • A property that is currently R880 000 and the valuation increases to R1.5 million (value goes up with 70%) if the nett increase in the total municipal account will be 12%
  • A property that is currently R1 million and the valuation increases to R2 million (value goes up with 100%) if the nett increase in the total municipal account will be 14%
  • A property that is currently R1.68 million and the valuation increases to R3.696 million (value goes up with 120%) if the nett increase in the total municipal account will be 18%

The Pensioners Rebate will thus be as follows:

  • 100% to approved applicant who are older than 60, who’s gross monthly household income may not exceed the amount of two times of state funded social pensions per month.
  • 70% to approved applicant who are older than 60, who’s gross monthly household income may not exceed the amount of four times of state funded social pensions per month (this is increased from 50% to 70%.
  • 40% to approved applicant who are older than 60, who’s gross monthly household income more than four times but less than eight times of state funded pension per month.

Tariff increases:

  • Sewer 6.8% – Basic/Fixed 7.5% unit costs (Average 7.21%)
  • Refuse 6.8%
  • Water 6.5% – Basic/Fixed 6.8% unit costs (Average 6.65%)
  • Electricity 15.10% indicative, based on Eskom increases
  • The average increase of this basket of services excluding Electricity amounts and Property Rates, relate to an average increase between 6.5% and 7.5%. In instances where water consumption exceeds 18kl, the increase might be higher.
  • Sundry tariffs – ranging from 6% to variable deductions or to a cost recovery adjustment. The extended list of tariffs is available.
  • Implemented as part of our pro-poor approach in the current budget, to continue for indigent households, the benefit of 10 kl of free water and in respect of sewerage the 4.2 kl free sewerage units of 7 kl.

For more detail regarding the Operational and Capital Budgets respectively, please consult the 2023/24 Final Budget book available on the municipal website.


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