State funds for municipalities comes in the form of conditional and unconditional (equitable share) grants. These are declared in the annual Division of Revenue Bill, which is passed into a law immediately after the budget speech by the Finance Minister in early February.
State funds for municipalities comes in the form of conditional and unconditional (equitable share) grants. These are declared in the annual Division of Revenue Bill, which is passed into a law immediately after the budget speech by the Finance Minister in early February.
The municipality receives these funds through tranches that are determined by the municipality's cash flow. The equitable share is nationally generated income that must be shared fairly between national, provincial and local government, based on the functions each has to fulfil, and the amount of revenue they are able to generate on their own.
This equitable share of national revenue covers operating transfers to municipalities to subsidise the operations of the municipality and for the provision of a basic level of services to the poor or indigent. Conditional grants may be used only 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. If Treasury does not approve the roll-over, the municipality is required to pay back the unspent portion to Treasury.
