National Treasury says municipalities are often collecting lower-than-projected revenues as consumers struggle to cope with a rising cost of living‚ while service costs rise.
Price increases affect municipalities as well and they in turn pass these on to consumers through higher tariffs. Municipalities are tasked with delivering water‚ electricity and waste management‚ among other services‚ to consumers in their jurisdictions.
“The economic slowdown and the substantial increase in tariffs as a result of higher prices for fuel‚ water and electricity‚ and materials continue to reduce the affordability and therefore the ability of consumers to pay for services‚” national Treasury said in a report released on Friday.
The report showed that municipalities on aggregate spent 42.9% or R131.8bn of the total adopted budget of R307.3bn. Capital spending amounted to R17.7bn or 31.4% of an adopted capital budget of R56.4bn. The report was for local government revenue and expenditure for the second quarter of the 2013-14 financial year. It covered the first six months (1 July 2013 – 31 December 2013) of the municipal financial year ending on 30 June 2014 and covered 287 municipalities.
It found that SA’s metropolitan municipalities were owed R52bn as at December 31 2013‚ with the City of Johannesburg owed the largest amount of R1736bn‚ national Treasury said in a report on Friday. The R52bn was an increase of R4.7bn‚ or 9.9%‚ from the same period in the 2012/13 financial year.
The report showed that the Ekurhuleni Metro was owed R10bn‚ Cape Town owed R6.3bn and the City of Tshwane owed R6bn. Secondary cities were owed R16.5bn in outstanding consumer debt as at December 31 2013.
“Outstanding household debt accounts for R11.4bn or 69.1% of the total outstanding debt‚” the report showed. Of the total debt‚ R13.4bn or 80.9% had been outstanding for more than 90 days.
Metros reported a collection rate of 93.6% while the secondary cities reported collection against billed revenue at 85%‚ which is less than the adopted target of 96.4%.
“… collections that are below billed revenue pose a significant risk to the cash and liquidity position of municipalities as planned expenditure is based on collections that are higher than actual collections‚” national Treasury said.