Cape Town - The City is struggling with its finances as the Covid-19 nationwide lockdown bites into its income, a situation that could become a burden to ratepayers.
On Wednesday, the City council approved its 2020/21 budget. The total budget is now R54.4 billion, up from the R52.7bn draft budget.
Under the dire circumstances, loss of revenue is however to be expected, both as a source of income from sales of electricity and water, refuse removal and property rates income,” Deputy mayor and mayco member for finance Ian Neilson said.
“It also lost revenue from bus fares, rental of facilities, traffic fines, impoundment fees, building fees etc. We have seen a lower payment ratio by our customers. We have had to ensure that we increase the debt impairment, we also reviewed our capital budget.”
Neilson said the City had worked hard to ensure that residents and ratepayers did not face massive increases over the medium-term emanating from the financial impact of Covid-19.
“Most of the City’s income is from rates and tariffs, and this money is used to provide basic services. We have already lost R860million in income over the last two months, with R386m in additional expenditure over the same time.
“We are preparing for an additional debt impairment of R1.4bn in the new financial year as debtors struggle to pay. We are doing our absolute best to assist with rates and services relief, payment arrangements and boosting our local economy. The City has made available more than R3bn in the new year for rates and service relief but we ask those who can still afford to pay, to please continue to do so,” Neilson said.
The budget, which kicks in from July 1, has changed since the draft two months ago. It shows a total Covid-19 budget impact of R3.8bn, including more than R900m of additional Covid-19 expenditure and a funding requirement of R2.1bn largely due to the crisis.
The draft budget, which went out for public consultation in April, received around 733 comments, most motivated on the bases of the Covid-19 pandemic and the impact it has had on the lives of Cape Town residents. Many of the comments received are about the effects of Covid-19, and object to increases of salaries for top executives and the increase of the council’s tariffs.
Mayor Dan Plato said that the City was ensuring that they spent every cent to stabilise the economy.
In April, President Cyril Ramaphosa presented a R500bn economic and social support package which could reboot the economy. He allocated R20bn to cash-strapped municipalities to assist them during the Covid-19 pandemic.
Neilson said: “The president announced several weeks back that there would be R20bn available - we have not received a cent of that nor have any other municipalities.”
The National Treasury said: “The national government has made available more than R5bn in support to municipalities to assist them in responding to the Covid-19 pandemic.
“This support is assisting municipalities to provide additional access to basic services for vulnerable communities and to sanitise public transport facilities.”