EDITORIAL | People paying the price for municipalities’ dismal financial record

The ANC in the Buffalo City metro reportedly managed to pass its R12.8bn budget with the tiniest of margins this week. It scraped through with just 51 votes out of the 100-member council where that party holds 61 seats. It did so only after delays during which it had to crack the whip to get enough interest from its own members to push it through.

It seems only the DA opposed the budget. Other political parties said they had better things to do than attend what is arguably the most important council sitting of the year. The chaotic meeting, in which there seemed to be so little interest, is illustrative of the ills this province faces in terms of municipal governance.

The business and other communities say there was very little consultation before the flawed budget, which includes steep electricity and water tariff hikes, was passed. It is the same almost everywhere else. At least BCM managed to pass its budget within the stipulated 30 days before the new financial year begins.

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The province’s only other metro, Nelson Mandela Bay, has yet to do so. Treasury reportedly rejected its first draft as unfunded. According to the last auditor-general report on local government finances, poor budgeting remained a critical issue in the Eastern Cape, with 22 municipalities (56%) incurring R3,31bn in unauthorised expenditure in that year.

And, despite the Municipal Finance Management Act (MFMA) stipulating that budgets be based on realistic revenue collection projections and cash reserves, about eight municipalities passed completely unfunded budgets that year. It is hardly any surprise that five of these municipalities were flagged by the AG as facing what that office terms “going concern uncertainty”.

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