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FINAL REPORT MARCH 2010

AMAJUBA DISTRICT MUNICIPALITY. BUDGET 2010/2011. FINAL REPORT MARCH 2010. BACKGROUND. This presentation is designed to provide a general overview of the Municipality’s finances and to demonstrate the Municipality’s accountability for the money it receives.

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FINAL REPORT MARCH 2010

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  1. AMAJUBA DISTRICT MUNICIPALITY BUDGET 2010/2011 FINAL REPORT MARCH 2010

  2. BACKGROUND This presentation is designed to provide a general overview of the Municipality’s finances and to demonstrate the Municipality’s accountability for the money it receives. The 2010/11 MTREF Budget has been prepared in compliance with the MFMA. This is a financial plan as informed by the municipality’s strategic plan (IDP) in order to ensure service delivery to the community that will enable the municipality to meet its operational and strategic objectives for the 2010/11 MTREF period.

  3. In view of its strategic priorities the Amajuba District followed a program of reconstruction and development that included: • the provision of basic services; • the progressive redressing of backlogs in infrastructure; • job creation; and • the enhancement of service delivery and financial management capacity. The 2010/11 medium-term budget sought to address development and transformation challenges by deliberately andPurposefully directing resources to the key priorities of the Municipalities. This included additional resources for economic development, safety and security and service delivery. Financial sustainability and viability remained the key principles and, to ensure compliance with the Municipal Finance Management Act The Municipality, having played a leading role in piloting the implementation of the National Treasury Financial Management Reforms, is proud of the continued implementation and roll-out of reforms and of the key developments and shifts that have taken place in financial management in the last two financial years.

  4. The Integrated Development Plan recognizes that the development and implementation of the various financial planning reforms(e.g. MFMA, GAMAP/GRAP and National Treasury financial reforms will fundamentally change the approach adopted in terms of financial planning. An integrated approach when appropriating resources has become essential for sustainable outcomes, especially taking into consideration the size of the Municipalities and the diverse challenges it faces. The Integrated Development Plan was based on various factors and financial variables which ultimately influence the budget and the financial performance of the Municipalities. The following are the major factors that have been taken into consideration and that primarily determine the financial approach: • Employee-related costs • Debt recovery • Tariff increases • Cost increases • Borrowing levels • Asset management

  5. CHALLENGES SUCCESSFULLY ADDRESSED DURING 2008/09 IMPLEMENTATION OF GENERALLY ACCEPTED MUNICIPAL ACCOUNTING PRACTICE/GENERALLYRECOGNISED ACCOUNTING PRACTICE (GAMAP/GRAP) Although the 2007/08 financial statements had already been compiled according to GAMAP/GRAP, the 2008/09 financial statements were further improved to comply with the latest specimen financial statements issued by National Treasury. CURRENT CHALLENGES The Amajuba District is faced with the following constraining factors which impedes its ability to expand: - • High levels of poverty and unemployment resulting in high service demands. • Capital spending pressures to eradicate infrastructure backlogs. • High level of deferred maintenance, coupled with inadequate spending on existing maintenance. • Scarcity of technical staff which has an impact on infrastructure development and maintenance of assets.

  6. THE PRIORITIES OF THE MUNICIPALITY FOR 2010/11 ARE: • Managing and developing our infrastructure • Developing our economy • Ensuring community safety • Building and sustaining our communities • Developing and enhancing our natural resources • Building our institution and governing well • Enhancing the image of the District

  7. THE PRIORITIES OF THE MUNICIPALITY FOR 2010/11 ARE

  8. THE PRIORITIES OF THE MUNICIPALITY FOR 2010/11 ARE:OPERATING AND CAPITAL BUDGET

  9. BUDGET ASSUMPTIONS /PARAMETERS 2010/11 The budget assumptions/parameters have been amended taking into account the parameters and guidelines from uThukela Water and National Treasury (Refer Circular No.51 of the MFMA dated 19 February 2010)

  10. REVIEW OF OPERATING RESULTS Figures with regard to the 2010/11 MTREF budget are included in this report. A graphic presentation of the Operating and Capital budgets is shown below. SUMMARY OF OPERATING AND CAPITAL BUDGET VS EXPENDITURE

  11. REVIEW OF OPERATING RESULTS Figures with regard to the 2010/11 MTREF budget are included in this report. A graphic presentation of the operating budgets is shown below. SUMMARY OF OPERATING INCOME AND EXPENDITURE

  12. REVIEW OF OPERATING RESULTS The graph below indicates the breakdown of Budgets for the 2009/2010 , 2010/2011,2011/2012 and 2012/2013

  13. REVIEW OF OPERATING RESULTS The graph below indicates the breakdown of Budgets for the 2009/2010 , 2010/2011,2011/2012 and 2012/2013

  14. OPERATING EXPENDITURE 2010/2011 The graph below indicates the breakdown per main expenditure group.

  15. OPERATING EXPENDITURE 2010/2011 The breakdown of expenditure per Department.

  16. OPERATING EXPENDITURE 2010/2011 The breakdown of expenditure per Department.

  17. OPERATING EXPENDITURE 2010/2011 The breakdown of Prioritized Projects included in General Expenditure

  18. OPERATING EXPENDITURE 2010/2011 The breakdown of Prioritized Projects included in General Expenditure

  19. REMUNERATION The actual expenditure on remuneration expressed as a percentage of the total expenditure .According to National Treasury a benchmark of less than 35% is acceptable. • Given the current economic climate, the municipality remains cautious when it comes to increasing salary budgets.The Salga collective agreement negotiated for the 2010/2011 an across the board increase based on the average CPI percentage plus one and a half(1.5%) percent.We have provided for a 10.5% increase, this will be adjusted on finalization of the budget.

  20. GOVERNMENT GRANTS AND SUBSIDIES The following table and graph show the amounts receivable in terms of contributions from the National & Provincial and Local government, which amounts have been included in the total revenue:

  21. GOVERNMENT GRANTS AND SUBSIDIES The following table and graph show the amounts receivable in terms of contributions from the National & Provincial and Local government, which amounts have been included in the total revenue:

  22. CAPITAL EXPENDITURE AND FINANCING • The Municipality’s capital expenditure budget for 2010/11 amounts to • R45,228,000 million . • Due to the fact that the external grant funding is limited, the Municipality has to • provide bridging finance for projects from other sources, such as own cash or • external loans.

  23. MUNICIPAL ENTITIES • The Legal Division was tasked with investigating the entity and making them compliant with relevant legislation. This brought about difficulties in the accountability of this entity towards the Amajuba District Municipalities. • UThukela Water(Pty) Ltd • INCOME FROM MUNICIPAL ENTITY • Income from the Municipal Entity is recognized on a monthly basis once the income collected on behalf of Municipal Entity has been quantified. The income recognized is in terms of the WSP agreement.

  24. PROPOSED TARIFFS INCREASE • ADM has concluded that in order to provide a sustainable service, it is necessary for the WSP to adopt principals of cost-recovery, to charge an affordable fee for water that is used to keep the local infrastructure operational.

  25. BUDGET RELATED POLICIES • The following polices have been taken into account in the development of the Draft 2010/11 MTREF budget: - • Credit Control Policy • Budget Policy • Supply Chain Management (SCM) Policy • Tariff Policy • Investment and Cash Management Policy • Asset Management Policy

  26. RECOMMENDATION • It is recommended that: - • The annual budget for the financial year 2010/11; and the indicative budget for the two • projected outer years 2011/12 and 2012/13 be approved as set out in the following annexure: - • (a) Annexure A – National Treasury Tables A1 to A10 • (b) Annexure B – Detailed Operating Projects • (c) Annexure C – Detailed Capital Projects • 2. The 2010/2011 Draft Medium Term Revenue and Expenditure Framework Budget be approved • as detailed in the Budget Summary

  27. 3. Approval be granted for the increase in tariffs and charges with effect from 1 • July 2010 in respect of the following: - • Rates and Service Tariffs • Sewerage 10% • Water 6% • 4. That free basic water be granted to a registered indigent of 6Kl per month. • ……………………………… • DR MS MLANGENI • EXECUTIVE MAYOR

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