29 April 2020
The Plett Ratepayers’ Oversight Report of the draft Bitou 2020-21 Budget is below. We are very concerned that it does not reflect the current economic environment, does not provide for maintenance and expansion of our aging infrastructure, and includes massive non-essential expenditure.
We have forwarded our concerns to Mayor Lobese and the Municipal Manager, asking them to prepare a more realistic budget.
We have asked our Ward 2 councillor to register his vote against this budget. And we have asked the Provincial authorities to not accept it and request its rework.
Some of our concerns are:
R20 million for overtime expense as a result of lax management,
R100 million for contracted services because management cannot do its jobs
20% scarce skills allowance for conventional skills, on top of excessive salaries
R12 million for EPWP workers and millions for Grants-in-Aid — both classic vote buying
9.6% increase in service charges for poor households — which will surely provoke a backlash.
We have requested it be reworked and will keep you informed.
Review of 2020/21 BITOU DRAFT BUDGET
Faced with Treasury’s negative growth scenario and major economic challenges forecasted for the next financial year, it is disappointing and concerning that Bitou responded with a budget that does not conform to current conditions, reflecting no creativity, no enterprise, no imagination … and appeared to just recycle an old budget!
The municipality has not reduced its revenue projection and has increased operating expenditure to the detriment of its cash position. Without proper funding in a well-managed revenue stream, Bitou will be unable to fulfil its service delivery mandate.
All non-essential expenditure categories are significantly over-spent, and essential costs such as engineering services are significantly under-spent.
This, as proposed in the municipality’s draft budget, is going to emerge as a real problem.
The Mayor’s Message looks curiously like his message in the 2017/18 Budget — like word for word. It even concludes with a reference to its “annual budget for 2017/18 MTREF.”
The date at the bottom of the 2020/21 budget title page says “31 May 2018.” If we are budgeting based on conditions three years ago then we are woefully in trouble.
The mayor puts much emphasis on eliminating “apartheid spatial development planning.” Has he calculated the financial impact of property devaluations if this is done? 20% of the municipality’s revenue is generated from property rates. Do previously disadvantaged people want to live in the centre of Plett where they have no schools, no clinics, no churches? Ask them.
The table headings in the budget say “2019/20 MTREF” instead of “2020/21”. Are the figures correct or are they last year’s figures? This is such a mess that we cannot rely on anything in it.
It looks like a hodge-podge of cut and paste from previous year’s budgets to the extent that it is so suspect we cannot work with it.
The budget was obviously prepared before COVID. The revenue projections are totally unrealistic.
When will a realistic budget be prepared?
We have R260 million of outstanding debt, and you are increasing expenditure by 6.5%? R750 million expenditure up from R702 million. How are you planning to fund it? Bitou’s debt is more than a third of its annual revenue figure. Bitou’s revenue collection is spiralling out of control. Household debt comprises 96% of the total. In effect, rates, taxes and service charges are not being collected from most of Bitou’s swelling population. Much of that debt will have to be written off. The average debt collection for the current financial year is 82% which is way below the norm. The municipality itself accepts that the debt is “huge.” The situation will get much worse in this fourth quarter due to the lockdown.
The Mayor’s message says “non-priority expenditure will be eliminated” yet R1 million has been budgeted for bursaries, R1 million for NGOs, during the worst economic crisis ever. According to MEC Bredell’s forensic report, the mayor’s Grants-in-Aid budget was misspent. What is the total budget for his candy jar this year?
The budget for “Other Expenditure” is R66.5 million. That is almost 10% of the budget in one unspecified bucket. Please provide details.
Employee cost of 36% of the operating budget is unacceptable. 30% is the goal. What percentage of that is political appointees in the mayor, deputy mayor and speaker’s offices?
Page 10 says that “overtime is uncontrollable” so you have increased the budget 100% rather than hold managers accountable to control it. It increased from R8 million to R20 million because managers can’t manage. Employees should do a full day’s work, and if not, then be replaced.
The mayor’s message says he plans to create employment opportunities. How exactly is he going to do that? Spending R12 million on EPWP workers is not creating employment. Unemployment figures for Bitou show an increase year after year so whatever you are doing is not working. The Local Economic Development Department is not creating sustainable jobs by holding concerts and parties. What are their plans to attract sustainable investment and employment in Plett?
Contracted services are budgeted to increase from 11% to 16%, compared to the National Treasury guidelines of 5%. If managers cannot do their jobs then hire people who can. If you are outsourcing building maintenance, security, grass cutting, water services…then what are our employees doing?
Please itemize reductions per Cost Containment Guidelines. Guidelines do not allow for congresses and seminars, travel, mayoral vehicles, printing and postage, subscriptions, memberships, catering, sponsorship, events, entertainment, etc. How much do you have in the budget for these categories?
Parks and beaches have no budget for 2020/21, and only R 49 000 for 2021/22. They are one of our most important assets.
Page 29 Table A7 Cash Flow from Operating Activities shows 2018/19 figures and skips to 2020/21; where are the 2019/20 figures? Again, cut and paste hastily done and we don’t know the real figures.
Water: R 17 mil. was requested for water operating/maintenance budget and approx. R 14 mil was granted. The cutting of requested amounts is short-sighted as the water and sewerage infrastructure is aging and problematic. Water losses are now above the allowable norm and water management devices and new smart water meters are urgently needed to cut water losses – R 500 000 has been allowed for this which is only a start.
Electrical: there is nothing allowed for the ongoing replacement of street light fittings (R 6 mil. allowed this year) and completion of the Odland and Longship street light installation, despite being in the IDP for many years. R 1 mil. has been budgeted for 2021/2022 which will not complete the work; R 1.7 mil for 2022/2023 is budgeted unless it is later cut.
Page 27 narrative says the capital budget increased to R86 million for 2020/21. Yet in the table, R86 million is listed under the heading for 2019/20, and 2020/21 shows R96 million. Which is it? We can’t trust your numbers.
There is NO amount budgeted for the replacement of fibre cement water pipes in town and surrounding residential areas. The frequent pipe bursts and frequent associated overtime involved in the repairs is evidence of the fact that this is a major priority. The major portion of the town’s fibre cement pipes are long past their design life. Poortjies is the only section of town that has had pipes replaced.
A total of R 10.7 mil is ridiculously low considering the aging of the electrical infrastructure. Of this total, R 4 mil for Kurland and R 3.5 mil. for Ebenezer. A paltry R 850 000 has been budgeted for “aging infrastructure replacement” for 2021/2022, nowhere near what should be budgeted for this.
No work on the completion of the high voltage ring main cabling has been done and there is no apparent allowance for this.
R 21.06 mil. total of which Kurland, Ebenezer, Shell Ultra City, Kwano, and Kranshoek take R 19.4 mil. Cannot establish what has been allowed for street repairs (potholes and major refurbishment of certain road surfaces) in Plett and the industrial area where road degradation is getting to the stage where complete surface replacement will be necessary.
Waste management expenditure is decreasing from R10 m this year to R1.4 m next year, yet the tariff is increasing 7% — the highest of all tariffs. The capital budget looks to be totally inadequate. This year’s was supposed to include the purchase of a shredder, as well as at least one additional compactor truck and it appears unlikely that either will be procured before the end of the year. Next year’s budget is also supposed to include provision for closure of the landfill site. The total cost of this will be in excess of R20 million, although final estimates are not yet available. In terms of the closure permit, the work has to be completed within three years of the granting of the permit. It has already been extended once and there’s only a year left in which to get the work done, failing which the municipality could face legal action from the Department of Environment Affairs and Development Planning. If the municipality was to allow for partial payment during the next financial year, this would probably be acceptable, provided they could show that work on closure was in progress.
The text of the budget document, section 1.5.5, says there is a provision of R33 million for the landfill site (formerly known as a garbage dump) closure and rehabilitation, and that there is a further provision over 3 years of R11 million for the establishment of the regional landfill site, but these figures do not appear in the capital budget as far as we can see.
R4 million over 2 years for upgrade of the Harkerville Community Hall? That is a tiny little community. R4 m would build a nice house in Brackenridge!
R130,000 for the Deputy Mayor’s office (furniture and office assets). Why does he even have an office. He has no function except to take over for the mayor if the mayor is absent, at which time he would move into the mayor’s office.
Sports-field upgrades over the next three years: R7 million. Of which R1.9 m is for cloakrooms at Bossiegif. R1.7 m for the soccer field at Green Valley.
Office furniture: R610,000, of which R315,000 is for the Housing Department. Are we furnishing all their homes too??
R1.6 m for the Qolweni Cultural Village. Could this be postponed for a few years?
And my favorite: R800,000 over 3 years for festive lights for the Xmas Festival of Lights.
The total capital budget is R86,617,434, of which R38,469,826 has to be funded from Bitou’s own coffers, and the rest is grants. If the expenditure is not for basic service delivery it should be omitted.
And did the budget makers forget about Ward 2? Not much there for us.
Annexure A Tariffs are listed as “2018/19.” Is the heading wrong or have you not computed new tariffs yet?
The budget says “zero-based budget model was implemented,” yet the tariffs appear to be a thumb-suck increase. Please show us the actual cost of delivering these services.
- waste management 7%
- electricity 6.25% (set by NERSA)
- property rates 5%
- sewerage 5%
- water 5%
Why is Knysna’s waste management tariff one-third the price of Bitou’s? Who does Knysna use to haul waste to Mossel Bay? How can they do it so much cheaper than Bitou?
The waste minimization process was supposed to have been implemented by June 2019. What is the status of it?
The budget says “tariff and property rate increases should be affordable…” yet it has added a R60 per month basic charge for electricity for indigents and sub-economic households who are already struggling, thus increasing their monthly bill by 9.6%. Page 6 says “If we don’t make efforts in reducing unemployment in our town and also reduce poverty our people will turn against us soon.” How do you think they will react to your 9.6% tariff increase?
In conclusion, you cannot as a responsible municipality cut water pipe lines out of the budget and put in money for Christmas lights. This budget is unacceptable.
Plettenberg Bay Ratepayers’ and Residents’ Association