Municipal officials will spend the next two months scrambling to spend R53.7 million – 80% of the capital expenditure and conditional grant budget for 2010/2011 – before a large chunk of it gets returned to the country's coffers.
Municipal officials will spend the next two months scrambling to spend R53.7 million – 80% of the capital expenditure and conditional grant budget for 2010/2011 – before a large chunk of it gets returned to the country's coffers.
And Makana's councillors are furious that, just before their term of office ends, so few of the projects which they've spent months planning have actually come to fruition.
From Makana Municipality's capital expenditure and conditional grant budget of R69.6 million, R15.9m – a little over 20% – had been spent by the end of January.
This emerged during a meeting of the Budget, Treasury and IDP Portfolio Committee last week, where councillors were presented with the capital expenditure and conditional grant spending report for the period ending 31 January 2011.
The financial report for January should have been discussed in March but could not occur due to a portfolio committee scheduled on 31 March that had no quorum. Councillor Les Reynolds slammed the underspending.
"Why do we sit and battle with [balancing]the budget and nothing happens?" he asked, warning that the current council was approaching the reality of ending its term of office, without having delivered on crucial infrastructural projects.
"People out there are jumping up and down, saying, 'We don't have roads, we haven't got toilets, we haven't got electricity, we haven't got water'.
"How do we say, 'Sorry, we can't do it', when we have large amounts of money sitting here?" Reynolds asked.
Also blocking service-delivery was the fact that crucial posts were not being filled. The people who should be getting the projects off the ground – the "foot soldiers" – had not been appointed to do the job.
Councillor Thuleka Ngeleza pointed out that while the money was there, and the posts had been budgeted for, there was still a crisis in Technical and Infrastructural Services.
Technical and Infrastructural Services had spent a mere R2.6m of its R24m allocation in the 2010/2011 capital expenditure and conditional grant budget.
Councillor Julia Wells proposed an urgent meeting to deal with the unspent funds. Chief Financial Officer, Jackson Ngcelwane said that the aim was to spend the funds by June.
He warned that conditional grants, such as the Municipal Infrastructural Grant and the Neighbourhood Development Partnership Grant, not spent by the beginning of the new financial year in July were not automatically carried over to the next financial year. However, he said an application for a request to roll over funds had been made to National Treasury.
How the municipal grants work State funds for municipalities comes in the form of conditional and unconditional grants. These are declared in the annual Division of Revenue Bill, which is passed immediately after the budget speech in early February.
Examples of conditional grants are the Municipal Infrastructure Grant, for infrastructure in townships; the Neighbourhood Development Partnership Grant, for beautifying townships, and the National Electrification Grant.
The conditional grants may only be used for their intended purpose, as indicated in the Division of Revenue Bill.
If a municipality fails to spend all the funds it receives through a conditional grant during a financial year, it loses them, unless it makes a special application to the National Treasury.
"Only after National Treasury has approved the rollover can a municipality amend its budget to include the unspent portion of conditional grants," said Makana's Chief Financial Officer, Jackson Ngcelwane. "If Treasury does not approve the roll-over, the municipality is required to pay back the unspent portion to Treasury."
The good news for Makana, he said, was that, so far, when the municipality had not been able to spend the conditional grants within the time specified, their requests for roll-overs had been had been considered sympathetically by Treasury.
Unconditional grants for municipalities come from nationally raised revenue.
The unconditional grants are intended to provide municipalities with the money to provide services to communities, and to give indigent and poor people access to basic services.
How this grant gets used is determined by the municipality, which can also use other resources to provide services to the poor. A report from Ngcelwane dated 30 September 2010, on the impact of utilising the equitable share funds for servicing indigent households, stated that in the 2009/10 financial year, about 50% of the share allocation (R42 million) was used to service indigent households, while the other half financed other municipal operations. Makana's unconditional grant allocation grew by 29% from the 2009/10 to 2010/11 financial year, from 42m to 54m.
The 2010/11 total capital expenditure budget is R69.5, which illustrates that the municipality is largely dependable on the equitable share (the unconditional grants).
