Durban - The eThekwini Municipality’s human settlements department is R3.9 billion in the red.
This is according to a report presented to the finance committee on Thursday that put the blame at the feet of the KwaZulu-Natal Department of Human Settlements, which was accused of not aligning its grants with the city’s housing infrastructure programme.
And unless the municipality and the provincial department thrash out a method to align the funding, a R1bn loan will be required to fund the shortfall – meaning Durban ratepayers could be slapped with a 5 percent rates increase.
According to the report, the city’s human settlements department spent R1.648bn in the 2013/14 financial year against a budget of R589.5 million.
“During this period the municipality received a R709m subsidy from the provincial Department of Human Settlements. This resulted in the department’s overdraft and debtors balance increasing to R1.387bn and R2.601bn respectively as at June 30, 2014,” the report said.
The shortfall is, according to the report, a result of the “misalignment” of the funding from provincial government coupled with unbudgeted priorities as a result of emergencies creeping in during the financial year.
This, the report said, forced the municipality to embark on projects that had not been approved by the provincial government.
“While this practice has been accepted in the past by the province, and the subsidies subsequently paid, there is no guarantee that all potential expenditure for the projects will be funded,” the report said.
“In an effort to eradicate the housing backlog and expedite service delivery to the poor, the human settlements department anticipated an expenditure of R1.2bn for 2014/15. Due to the budgetary constraints the requirements were reduced to R527.6m.
“The anticipated expenditure after properly analysing the procurement planning for top structures in the 2014/15 year is expected to increase to R1.640bn, as compared to an approved budget of R527.6m.
“As is current practice, the municipality funds the service and receives payment from the KZN Department of Human Settlements on set milestones against tranches being met.”
The report said the planned capital spend on the community residential unit was R144.5m against a budget of R70m – exceeding the budget by R74.5m.
According to the report this overexpenditure could be categorised as “unauthorised expenditure” and result in a negative finding in the auditor- general’s report.
Members of the ANC resolved that the city manager and the executive committee meet the provincial department and come up with a solution to align the funding.
DA caucus leader Zwakele Mncwango said it would be outrageous if the city was forced to borrow R1bn to cover the shortfall as it would increase rates and drive away investors.
City manager Sbu Sithole said his officials had met the provincial department on Monday and were negotiating ways to align the funding.
“Part of the problem is that we have set ourselves a target to build 8 500 houses, but the provincial department has only budgeted for 4 000. These are the challenges we need to overcome,” he said.
The department could not be reached on Thursday night.
Daily News