PART 2 SUPPORTING DOCUMENTATION
2.1 OVERVIEW OF THE ANNUAL BUDGET PROCESS
Section 53 of the MFMA requires the Mayor of the municipality to provide general political guidance of the budget process and the setting of priorities that must guide the preparation of the budget. In addition Chapter 2 of the Municipal Budget and Reporting Regulations states that the Mayor of the municipality must establish a Budget Steering Committee to provide technical assistance to the Mayor in discharging the responsibilities set out in Section 53 of the Act.
The Budget Steering Committee (BSC) consists of the Municipal Manager and senior officials of the municipality meeting under the chairpersonship of the MMC for Finance.
The purpose of the Budget Steering Committee is to ensure that:
The process followed to compile the budget complies with legislation and good budget practices;
There is proper alignment between the policy and service delivery priorities set out in the City’s IDP and the Budget, considering the need to protect the financial sustainability of the municipality;
The municipality’s revenue and tariff setting strategies ensure that the cash resources needed to deliver services are available; and
The various spending priorities of the different municipal departments are properly evaluated and prioritised in the allocation of resources.
In addition to the BSC, the City has established the Technical Budget Steering Committee (TBSC) that plays an advisory role. The TBSC focuses on the technical analysis of budget proposals and is intended to augment the work of the BSC. The TBSC and BSC meetings were held on 27 - 28 November 2017 and on 16- 18 January 2018, respectively.
2.1.1 Budget Process Overview
In terms of section 21 of the MFMA the Mayor is required to table in Council ten months before the start of the new financial year (i.e. in August) a time schedule that sets out the process to revise the IDP and prepare the Budget.
Key dates applicable to the process were:
Budget and tariff process 2017/18 Timeframe Status
Mayoral Lekgotla 1 13- 15 November 2017 √
Presentations of budget proposals to Technical Budget Steering Committee
27- 28 November 2017 √ Budget Steering Committee meetings 16- 18 and 22 January 2018 √
Budget Lekgotla 2 13-14 February 2018 √
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Budget and tariff process 2017/18 Timeframe Status
NT Engagements (Mid- year Review) 1-2 February 2018 √
Submission of final budget files and proposals by departments and entities to Budget Office
23 February 2018 √
Mayoral Committee considers tabled draft IDP, Budget, Tariffs, SDBIPs and Business Plans
15 March 2018 √
Tabling of the draft IDP, Budget, Tariffs, SDBIPs and Business Plans at Council
20 March 2018 IDP, Budget and Tariffs outreach process March- April 2018 Approval of IDP, Budget, Tariffs, SDBIPs and Business
Plans by Mayoral Committee
08 May 2018 Council approval of final IDP, Budget, Tariffs, SDBIPs and
Business Plans
25 May 2018
The process for the 2018/19 MTB commenced with the 1st Budget Lekgotla that was held on 13- 15 November 2017. The objectives of the Lekgotla were to reflect on the progress made in relation to the service delivery imperatives, discuss the strategic direction of the new leadership and to reach an agreement on key focus areas, priorities and interventions.
Subsequent to the Budget Lekgotla, Budget Guidelines were issued to departments and municipal entities (MEs), in line with the recommendations of the Mayoral Lekgotla. Departments and MEs presented their budget proposals to the Technical Budget Steering Committee hearings held on 27- 28 November 2017 and to the Budget Steering Committee held on 16-18 and 22 January 2018. The BSC is established in terms of the local government regulatory framework, and for the City of Johannesburg incorporates additional members co- opted to assist in the formulation of strategic priorities. The Budget Steering Committee reviews and evaluates key priority programmes for the clusters, departments and entities in the short and medium term and outcomes thereof in relation to GDS imperatives and the strategic direction as set at Mayoral Lekgotla. It further deliberates on performance targets and indicators and reviews the proposed operating and capital expenditures. In between are sessions at executive management level that seek to develop programme content and shared understanding of priorities, interventions and focus areas.
The assessment of the Budget Steering Committee hearings was then presented to the second Budget Lekgotla held on 13- 14 February 2018. Draft Medium Term Budget allocations were determined to guide the Budget Lekgotla, and create focussed discussions. Departments and MEs were requested to prepare their draft budgets in line with the indicative allocations and to align the budget to the key strategic priorities/programmes.
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2.1.2. IDP and Service Delivery and Budget Implementation Plan
The City’s IDP is its principal strategic planning instrument, which directly guides and informs it’s planning, budget, and management and development actions. This framework is rolled out into objectives, key performance indicators and targets for implementation which directly inform the Service Delivery and Budget Implementation Plan. There will be areas revised in line with the new strategic priorities, and to create focus in resource allocation. The Inner City regeneration and the facilitation of economic growth to no less that 5% of the gross value added (GVA) have been pronounced as the top two priorities.
The process plan applicable to this revision cycle included the following key IDP processes and deliverables:
Registration of community needs;
Compilation of departmental business plans including key performance indicators and targets;
Financial planning and budgeting process;
Compilation of the SDBIP; and
The review of the performance management and monitoring processes
With the compilation of the 2018/19 MTB, each department/function had to review its business planning process, including the setting of priorities and targets after reviewing the mid-year and third quarter performance against the 2017/18 Departmental Service Delivery and Budget Implementation Plan. Business planning links back to priority needs and master planning, and essentially informed the detail operating budget appropriations and three-year capital programme.
1.1.3 Review of the Financial Development Plan
The financial development plan has been reviewed in line with historic performance trends and the local government regulatory framework, and used to confirm both the adjustment budget and the 2018/19 budget indicatives. The outcomes of the process were used to inform the resource allocation process. The funding model still relies heavily on revenue generated from trading services through tariffs, supported by grants and loans. Built into the models are modules that recognise constrains as a result of existing commitments and the projected financial position. Optimisation as a modelling technique was used to arrive at budget limits that put the organisation at a sound financial position. The modelling process also shared light on the performance of major revenue sources in relation to capital investments made, providing a rich background of evaluating budget proposals.
2.1.4 Community Consultation
As per legislative requirements, once the draft budget is tabled in Council, it must be made available for the public to comment on. The public participation process will be undertaken in line with the prescripts of the MFMA, Municipal Systems Act, and other applicable legislation. The program is managed in conjunction with the Office of the Speaker. The tabling of the draft budget in March 2018 will mark the commencement of community participation, encourage discussion with all stakeholders and provide an opportunity for feedback.
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The public participation process will take place throughout the month of April 2018 with the support of the City’s regional structures. The IDP, the Budget and all tariff related policies will form a package of document for consultation.
The outcome of the public participation process on the draft budget and proposed tariffs will be considered and be used to refine the draft budget for Council’s approval in May 2018.