Vast underspend on City’s capex budget

WHILE the City of uMhlathuze’s financial position appears sound, the slow pace of capital expenditure – directly linked to infrastructure provision and service delivery – is a concern.

This was the gist of the 2017/2018 mid-year budget review (June – November), presented at Exco on Wednesday.

In his report, Mayor Mdu Mhlongo said the municipality has done well in terms of its operational budget, showing a surplus of R88.7-million at the end of December, indicating success in raising and collecting its budgeted and billed income.

However, a large number of vacant posts have been advertised and an increase in councillors’ remuneration – not yet gazetted – haave to be provided for, which will impact on the operational costs.

ALSO READ: City of uMhlathuze exco extracts

Capex concern

Based on the draft adjusted capital budget of R570-million, capital expenditure is extremely low at R134.1-million (23.54%).

Cllr Mhlongo deemed this ‘not acceptable’ and although expenditure is expected to rise as the year progresses, the Project Steering Committee is monitoring capital projects to ensure any issues are resolved promptly.

The administration was urged to ‘work hard to better the last year expenditure performance of 93%’.

Collection of outstanding debts, more especially in the traditional areas, was also a challenge.

In terms of major debtors, council is owed a staggering R439.1-million, of which business is the greatest contributor at R241-million.

However, a large portion of this sum is being contested by debtors in ongoing court actions.

Government owes R19.4-million, while householder debts total R166.3-million.

Income from fines has also reduced alarmingly, while concern was expressed over the high cost of security.

Debate on the budget centred on the slow capital expenditure, largely linked to cancelled tenders, and the high rate of outsourcing of municipal functions and hiring of external consultants.

It was agreed improvement of internal competency and expertise was needed, especially with regard to the legal services and HR departments.

It was reported that national Treasury will be distributing a circular on how to use fewer external consultants.

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