In an earlier article, a brief summary was given of the main sources of income for municipalities and reference was made to grants that they receive from national government.
These grants are funded from the central fiscus, so in reality all taxpayers therefore also indirectly contribute to this funding source.
This means that people living in rateable settlements within municipal areas pay ‘normal’ tax, but also municipal property rates.
Municipalities receive grants from the national government that in many instances keep them functional.
Because municipalities are supposed to be focused on development, the main purpose of the Government Municipal Infrastructure Grants (MIGs} is to ensure service delivery by enabling them to do proper advance planning for the provision of basic services – and to ensure that the funds made available are optimally utilised.
The practical reality is that municipalities largely fail to achieve this and the general trend is underspending on MIG projects.
The average spend on such projects is between 60% and 80% of the allocation received from the national government.
The implications are that the unused funds are reverted back to the government. And if the trend in underspending continues, the annual allocation is reduced.
This issue of underspending is a regular item on the Auditor-General’s reports on municipal financial statements.
In theory, municipalities have no excuses for failing to utilise allocated grants to them. They have advance insight into the grants reserved for them for the next three years.
This is provided for in terms of the Division of Revenue Act and follows on the approval of the annual national budget.
The burning question therefore is why do municipalities fail to spend the money they receive for capital projects?
Proper advance planning appears to be a major stumbling block because municipalities wait until the commencement of their following budget year budget before even starting with project planning.
Consequently actual project implementation in such cases only begins halfway through the municipal budget year which obviously reflects as underspending.
Municipalities should begin project planning immediately after their MIG allocations are known.
A second excuse municipalities often offer is the lack of the necessary expertise for project planning and implementation.
This can also be attributed to a lack of proper planning in the recruitment of qualified skills because of a reluctance to appoint consultants.
A third argument is that the use of emerging contractors quite often causes delays with project implementation. Proper advance planning is also needed to address this issue.
The public must always question the performance of their municipalities and challenge them when basic management skills are lacking.
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