Cape Town proposes budget increase of 14%

Posted by: Saving Water SA (Cape Town, South Africa) – partnered with Water Rhapsody conservation systems – 31 March 2010

The Executive Mayor of Cape Town, Alderman Dan Plato, has tabled a draft budget proposing an increase of the operating budget by 14% to R19.3 billion. The capital budget declines to R3.55 billion from R5.59 billion, as 2010 World Cup funding comes to an end and future borrowings are limited.

Tariff increases include average increases of 24,6% for electricity, 10% for water and sanitation, and 18% for refuse collection.

“The significant jump in electricity prices is inevitable because of the 28.9% Eskom bulk tariff increase to local government,” says Alderman Ian Neilson, Executive Deputy Mayor and Mayoral Committee Member for Finance.

“The significant increase in refuse collection tariffs is due to the closure of older refuse disposal sites and the subsequent need to transport refuse over much further distances than before. It also provides for a significant replacement of refuse collection trucks.

“The latest general valuation has increased the total property valuation by 27% to R805 billion. However, the total required increase in rates income is only 9.3%, leading to a reduction in the rate to 0,531 cents-in-the-rand. The initial value deduction has been increased from R88 000 to R200 000,” he says.

In total, the City plans to set aside about R1.2 billion (equal to 6% of revenue) to provide relief for the poor and other ratepayers. This includes, amongst others, subsidies of R166 million for refuse removal, R162 million for free electricity, R89 million for free water, R67 million for solid waste for informal settlements, R60 million for indigent relief for tenants of Council-owned houses, and provision for a total subsidy of about R110 million for rates rebates.

The gross monthly income threshold for rebates for senior citizens and people with disability will be raised to R8 500 per household, affording discounts of up to 100%.

“The City’s overall strategic focus continues to be that of infrastructure-led economic development. Our main thrust is to attract more investments to Cape Town in order to stimulate economic growth, create more job opportunities, and broaden our revenue base,” says Alderman Neilson.

“Cape Town has made major advances in its vision to move forward, but we still have a long way to go. We are realistic about the challenges and plan to use the available resources productively in meeting the needs of our residents.

“In line with the world-wide economic downturn, we have followed a conservative financial approach, which acknowledges the reality of declining revenue streams and escalating financial costs,” he says.

The City has proposed cost savings measures such as a R113 million cut in staff vacancies, a R180 million cut in general expenses, reduced grants and subsidies, cuts in overseas travel and allowances, as well as general cut backs on purchases of new furniture and equipment.

The bulk of the capital budget is dedicated to core infrastructural services for water, electricity, sanitation, solid waste, transport, roads and major projects.

Key capital allocations include R439 million for the Integrated Rapid Transit system, R190 million for waste water treatment works, R180 million for landfill infrastructure, R130 million for the Green Point Common, R42 million for fibre optic broadband infrastructure, R16 million for libraries in Khayelitsha, and R9,5 million for fire stations.

The draft budget can be viewed at all public libraries and is open for comment until April 30. The final budget will be approved by the City Council at the end of May 2010. The new rates and tariffs will be introduced as from 1 July 2010.

Salient points of the draft budget

Source: City of Cape Town

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