With its residents reeling from high Covid-19 infection rates and the lockdowns imposed to contain it, the City of Johannesburg on Tuesday unveiled a R73.3bn budget for the 2021/2022 financial year, aimed mostly at service delivery.
Finance MMC Jolidee Matongo said that while the coronavirus pandemic continues to have a devastating effect on the city’s revenue, the metro still hopes to finance most of it by revenue from taxpayers.
With local government elections due to take place in late October, it is little wonder the budget is focused mainly on the issues its electorate has been complaining about, including water, electricity, houses and roads.
The budget is a significant increase from the metro’s budget of R68.1bn for the 2020/2021 financial year.
The metro collects about R42bn annually, but this has been severely affected by the pandemic as ratepayers and companies struggle to pay for services.
Matongo said the city’s liquidity nevertheless improved from R5.4bn in 2018/2019 to R5.6bn in 2019/2020, adding that debt levels are also expected to remain below 40% of the operating revenue in 2023.
Matongo told Business Day that the R73.3bn budget is derived from different financial streams though the bulk comes from ratepayers.
“We get various grants from the national government, including the Urban Settlement Development Grant, grants for housing, and an equitable share from the National Treasury,” he said.
“We are also presenting a request to council for the municipality to acquire a loan of R3.1bn from the financial markets.”
Health department
Most of the budget has been channelled towards service delivery initiatives aimed at rebuilding and transforming the metro during the pandemic.
The expenditure budget of the city’s health department increases by 3.7% from the previous year to R1.4bn in 2021/2022. It will go towards spending on extending clinic hours and the rollout of mobile clinics across the metro.
Community development efforts have been allocated a R1.4bn expenditure budget and R144m more for the upgrading of facilities and construction of multipurpose centres.
The social development department has been allocated R76.2m; public safety a three-year capital budget of R326m; economic development an operational expenditure budget of R195.5m and about R14m over the medium term.
“The allocation will allow for the revitalisation of industrial parks and priority economic zones,” said Matongo.
On the municipality’s entities, the finance MMC said City Power will use its R19.9bn operational budget to install and repair street lights, attend to electricity failures, and maintain and improve network stability.
Bus refurbishment
“City Power is further allocated a three-year capital budget of R2.8bn, which is aimed at various infrastructure projects. These include R650m towards the electrification of informal settlements and R165m for public lighting,” said Matongo.
Pikitup has been allocated a R3.4bn budget and a further R179.7m for capital spend, Joburg Market R445m and a three-year capital budget of R240m, while Metrobus has been allocated R767.5m and a three-year R288m capital budget to spend on the bus refurbishment project and a cashless ticketing system.
Matongo said Johannesburg Water’s expected operational surplus amount to R1.2bn in the upcoming financial year, “with an expenditure budget of R13.4bn”. The metro’s water utility was allocated a further R3.3bn multiyear capital budget.
Johannesburg City Parks and Zoo was allocated a multiyear capital budget of R297m to cover upgrades to the zoo infrastructure, recreational parks and cemeteries; while the Joburg Theatre received an expenditure budget of R217.8m that will allow the entity to “host, develop and stage productions that tell a story of social cohesion”.
Matongo said the metro has an operational expenditure of R65.1bn, while its capital expenditure sits at R8.2bn for 2021/2022, “with a three-year capital budget of R25.5bn”.
He said a difficult balancing act of the municipality’s budget has enabled the metro to take into consideration “pleas from residents for minimal tariff increases in the finalisation of the proposed rates and tariffs for 2021/2022 — amid the Covid-19 economic impact on livelihoods”.
While property rates were increased by 4% for this financial year, Matongo said the property rates will only increase by 2% for 2021/2022.
Electricity tariffs
“This is in line with heeding the call from ratepayers against an increase and ... also considering the reality of having to ensure that the city has the revenue to continue delivering services to residents,” he said.
The electricity, water, sanitation and refuse tariffs for 2021/2022 will be set at 14.59%, 6.8%, 6.8%, and 4.3%, respectively.
Matongo said in the 2021/2022 financial year projected revenue for electricity increases is up 17.4% to R20.2bn. He said the city is monitoring revenue trends, tariff structures, changes in the regulatory framework, and the economic effect on various consumer categories as part of formulating revenue forecasts.
“The rate of revenue collection is currently expressed as a percentage of annual billing,” he said.
“For the medium term, collection rates for the various services are an overall budgeted collection rate of 90.8% for 2021/2022, 91% for 2022/2023 and 91.1% for the outer years.”
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