LETSEMENG LOCAL MUNICIPALITY

(1)

LETSEMENG LOCAL MUNICIPALITY

MEDIUM TERM REVENUE AND EXPENDITURE FRAMEWORK

2013-14

(2)

2

the integrated development plan 18 - 19 2.3. Measurable performance objectives 19 - 19 2.4. Overview of the budget-related policies 19 - 21 2.5. Overview of the budget assumptions 21 - 21 2.6. Overview of the budget funding 21 - 22 2.7. Expenditure on allocations and grant programmes 22 - 22 2.8. Allocations and grants made by the municipality 22 - 22

(3)

3

2.9. Councillor and board members allowances

and employee benefits 22 - 23

2.10. Monthly targets of revenue, expenditure and cash flow 23 - 23

2.11. Annual budgets and service delivery and budget

implementation plan: internal departments 23 - 23

2.12. Annual budgets and service delivery agreements:

municipal entities and other external mechanisms 23 - 23 2.13. Contracts having future budgetary implications 23 - 24 2.14. Capital expenditure details 24 - 24

2.15. Legislation compliance 24 - 26

2.16. Other supporting documents 26 - 26

2.17. Municipal Manager’s quality certificate 26 - 26 Annexures

Tariff list 27 - 42

(4)

4

PART 1 1.1. MAYOR’S REPORT

The Mayor’s report (formerly Mayor’s budget speech) will be presented by the Mayor to Council during the final budget.

1.2. RESOLUTIONS

1. Council hereby resolve that the annual budget of the municipality for the financial year 2013-14; and indicative budget for the two outer years 20014-15 and 2015-16 be approved as set-out in:

a) Table A1: Budgeted Summary

b) Table A2: Budget Financial Performance (revenue & expenditure by standard classification)

c) Table A3: Budget Financial Performance (revenue & expenditure by municipal vote)

d) Table A4: Budget Financial Performance (revenue & expenditure) e) Table A5: Budgeted Capital Expenditure by vote, standard classification

and funding

f) Table A6: Budget Financial Position g) Table A7: Budget Cash Flow

h) Table A8: Cash backed reserves / accumulated surplus reconciliation i) Table A9: Asset Management

j) Table A10: Basic Service Delivery Measurement

2. that property rates tariff and tariffs for other services charges as reflected in the formal tariff list be approved for consultation processes;

3. council hereby resolve that the community and the relevant stakeholders be consulted on the tabled budget; draft IDP; proposed tariff;

4. council hereby resolve the Accounting Officer advertise and make available copies of the draft IDP; tabled budget and draft policies and that they be submitted to the relevant stakeholders.

(5)

5

1.3. EXECUTIVE SUMMARY

This section provides an overview of the Letsemeng Local Municipality‘s 2013-14 to 2015-16 Medium Term Revenue and Expenditure Framework. It includes an assessment of how the budget links with the national and provincial government contexts along with a review of the fiscal position of municipality.

The Municipality’s budget must be seen within the context of the policies and financial priorities of national, provincial and district government. In essence, the spheres of Government are partners in meeting the service delivery challenges faced by Letsemeng Local Municipality. The municipality alone cannot meet these challenges. It requires support from the other spheres of Government through the direct allocation of resources, both financial and non-financial as well as the achievement of their own policies.

Therefore the municipality’s resources have been allocated taking into consideration the priorities as set out during the State of the Nation Address (SOPA), State of the Provincial Address as well as other guidelines as issued by other spheres of government. Despite this, the BTO experienced some challenges during the compilation of the 2012-13 MTREF which can be summarised as follows:

(a) The ongoing difficulties in the national and local economy and limited economic activities within Letsemeng municipality;

(b) Aging and poorly maintained infrastructure with no capital maintenance plans to appropriately allocate resources towards maintenance;

(c) The need to reprioritise projects and expenditure within the existing resource envelope given the cash flow realities and declining cash position of the municipality due to low revenue collection rates;

(d) The increased cost of bulk water and electricity (due to tariff increases from Oranje Reit / Kulkfontein Dam and Eskom), which is placing upward pressure on service tariffs to residents. Continuous high tariff increases are not sustainable as there will be point where services will no-longer be affordable to the majority of the residents of Letsemeng Municipality (thereby increasing the debtors book of the municipality);

(e) The need to develop tariffs that are cost reflective of providing such services;

(f) Wage increases (including long service bonuses) for municipal staff that continue to exceed consumer inflation as well as the need to fill critical vacancies;

(g) The need to meet the community expectations in terms of service delivery with the limited financial resources at hand.

(6)

6

The following budget principles and guidelines directly informed the compilation of the 2012/13 MTREF:

(a) Budgeting for a funded and credible annual budget compared to a balanced budgeted;

(b) The 2012-13 Adjustments Budget priorities and targets, as well as the base line allocations contained in that Adjustments Budget were adopted as the upper limits for the new baselines for the 2013-14 annual budget;

(c) Tariffs on services and property rate increases should be affordable and should generally not exceed inflation as measured by the CPI, except where there are price increases in the inputs of services that are beyond the control of the municipality, for instance the cost of bulk water and electricity;

(d) There will be no budget allocated to national and provincial funded projects unless the necessary grants to the municipality are reflected in the national and provincial budget and have been gazetted as required by the annual Division of Revenue Act.

Total operating revenue has grown by 4.09 per cent or R4.3 million for the 2013-14 financial year when compared to the 2012-13 Adjustments Budget.

Total operating expenditure for the 2013-14 financial year has been appropriated at R101.7 million and translates into a budgeted surplus of R1.5 million. When compared to 2012-13 Adjustment Budget, operational expenditure has grown by R3.7 million in the 2012-13 budget and by R5.6 million and R6.0 million for each of the respective outer years of the MTREF.

1.4. ANNUAL BUDGET TABLES

Below are the annual tables as per the requirements of Municipal Budget and Reporting Regulations:

a) Table A1: Budget summary

b) Table A2: Budget: Financial Performance

c) Table A3: Budget Financial Performance (revenue and expenditure by municipal vote)

d) Table A4: Budget Financial Performance (revenue and expenditure)

e) Table A5: Budgeted Capital Expenditure by vote, standard, classification and funding

(7)

7

f) Table A6: Budget Financial Position g) Table A7: Budget Cash flow

h) Table A8: Cash backed reserves/accumulated surplus reconciliation i) Table A9: Asset Management

k) Table A10: Basic service delivery measurement

(8)

8

Description 2009/10 2010/11 2011/12

R thousands Audited

Outcome

Audited Outcome

Original Budget

Adjusted Budget

Full Year Forecast

Pre-audit outcome

Budget Year 2013/14

Budget Year +1 2014/15

Budget Year +2 2015/16 Financial Performance

Property rates 3 154 4 247 5 350 6 382 6 382 6 382 – 6 707 7 036 7 388 Serv ice charges 16 004 23 053 24 542 40 406 40 980 40 980 – 43 696 46 411 49 325 Inv estment rev enue 350 525 3 001 949 1 210 1 210 – 1 352 1 418 1 489 Transfers recognised - operational 55 022 59 068 48 782 53 833 55 008 55 008 – 53 974 53 834 53 500 Other ow n rev enue 2 484 1 912 603 690 640 640 – 843 885 930 Total Revenue (excluding capital transfers

and contributions)

77 014

88 806 82 279 102 259 104 220 104 220 – 106 573 109 585 112 632

Employ ee costs 18 686 21 680 – 33 257 33 152 33 152 – 35 412 37 552 39 855 Remuneration of councillors 1 725 2 082 3 068 2 600 2 700 2 700 – 2 888 3 075 3 263 Depreciation & asset impairment – – – – – – – – – – Finance charges 972 1 351 66 66 66 66 – 68 71 75 Materials and bulk purchases – – – – – – – – – – Transfers and grants – – – – – – – – – – Other ex penditure – 9 465 7 056 42 034 33 721 33 721 – 66 633 69 967 73 512 Total Expenditure 21 383 34 577 10 191 77 958 69 639 69 639 – 105 000 110 666 116 705 Surplus/(Deficit) 55 631 54 229 72 089 24 302 34 581 34 581 – 1 572 (1 082) (4 073) Transfers recognised - capital 8 651 21 920 24 216 22 090 23 167 23 167 – 34 306 57 254 84 179 Contributions recognised - capital & contributed a 2 400 2 348 – 1 791 2 375 2 375 – 2 496 2 619 2 750 Surplus/(Deficit) after capital transfers &

contributions

66 682

78 497 96 305 48 183 60 123 60 123 – 38 374 58 791 82 856

Share of surplus/ (deficit) of associate – – – – – – – – – – Surplus/(Deficit) for the year 66 682 78 497 96 305 48 183 60 123 60 123 – 38 374 58 791 82 856 Capital expenditure & funds sources

Capital expenditure 11 051 24 648 24 499 23 881 25 542 25 542 – 36 802 59 873 86 929 Transfers recognised - capital 8 651 21 920 24 216 22 090 23 167 23 167 – 34 306 57 254 84 179 Public contributions & donations – – – – – – – – – – Borrow ing – – – – – – – – – – Internally generated funds 2 400 2 348 283 1 791 2 375 2 375 – 2 496 2 619 2 750 Total sources of capital funds 11 051 24 268 24 499 23 881 25 542 25 542 – 36 802 59 873 86 929 Financial position

Total current assets 41 448 25 741 43 347 78 478 43 347 43 347 – 43 347 44 667 45 791 Total non current assets 151 541 160 851 559 406 254 419 626 405 626 405 – 626 405 627 248 627 749 Total current liabilities 4 284 4 021 42 705 6 736 18 579 18 579 – 18 579 18 576 18 681 Total non current liabilities 11 219 18 027 6 397 – – – – – – – Community w ealth/Equity 74 585 241 637 608 757 261 969 608 701 608 701 – 608 701 610 000 611 000 Cash flows

Net cash from (used) operating 14 580 34 592 2 048 27 491 27 491 27 491 – (15 343) 1 866 22 491 Net cash from (used) inv esting (17 342) (29 952) (22 250) 28 594 28 594 28 594 – 42 514 65 673 92 780 Net cash from (used) financing – – – – – – – – – – Cash/cash equivalents at the year end 33 719 38 359 18 157 93 694 93 730 93 730 37 645 69 171 136 710 251 981 Cash backing/surplus reconciliation

Cash and inv estments av ailable 7 168 7 695 22 477 53 479 22 477 22 477 – 22 477 22 826 23 327 Application of cash and inv estments (15 509) (18 394) (20 060) (26 332) (2 436) (2 436) – 14 096 14 100 14 200 Balance - surplus (shortfall) 22 677 26 089 42 537 79 811 24 913 24 913 – 8 381 8 726 9 127 Asset management

Asset register summary (WDV) 11 067 24 706 24 746 23 928 25 788 25 788 37 048 37 048 60 121 87 178 Depreciation & asset impairment – – – – – – – – – – Renew al of Ex isting Assets – – – – – – – – – – Repairs and Maintenance 2 105 14 686 4 763 4 131 7 415 7 415 7 793 7 793 8 175 8 584 Free services

Cost of Free Basic Serv ices prov ided 11 530 8 967 8 967 9 416 9 416 9 416 3 404 3 404 10 084 10 443 Rev enue cost of free serv ices prov ided 13 791 10 956 10 957 11 420 11 520 11 570 36 432 36 432 13 280 13 285 Households below minimum service level

Water: – – – 1 1 1 1 1 0 0 Sanitation/sew erage: – – – – – – – – – – Energy : – – – 1 1 1 1 1 1 1 Refuse: – – – 8 8 8 9 9 9 9 2013/14 Medium Term Revenue &

Expenditure Framework Current Year 2012/13

FS161 Letsemeng - Table A1 Budget Summary

(9)

9 FS161 Letsemeng - Table A2 Budgeted Financial Performance (revenue and expenditure by standard classification)

Standard Classification Description Ref 2009/10 2010/11 2011/12

R thousand 1 Audited

Outcome

Budget Year 2013/14

Budget Year +1 2014/15

Budget Year +2 2015/16 Revenue - Standard

Governance and administration 3 997 6 567 35 781 13 956 16 349 16 349 14 874 15 435 16 019 Executive and council 587 1 021 787 1 830 1 806 1 806 1 823 1 792 1 758 Budget and treasury office 2 574 4 364 34 760 10 951 13 276 13 276 11 745 12 333 12 939 Corporate services 836 1 182 235 1 175 1 268 1 268 1 306 1 310 1 322 Community and public safety 1 870 2 360 1 044 2 881 2 789 2 789 2 855 2 826 2 820 Community and social services 1 005 1 094 667 974 1 092 1 092 1 039 1 030 1 029

Sport and recreation 330 550 309 925 715 715 789 779 776

Public safety 528 649 – 916 684 684 757 745 740

Housing 8 68 68 66 182 182 170 173 176

Health – – – – 116 116 101 100 100

Economic and environmental services 142 209 130 795 1 174 1 174 1 276 1 267 1 271 Planning and development – 115 115 685 832 832 953 940 938

Road transport 142 93 15 110 342 342 323 327 333

Environmental protection – – – – – – – – – Trading services 57 092 64 489 66 963 84 626 85 195 85 195 87 568 90 056 92 522 Electricity 20 632 25 729 27 858 36 475 36 475 36 475 37 804 39 262 40 808 Water 13 837 16 959 16 935 18 218 18 214 18 214 19 316 19 783 20 165 Waste water management 11 381 13 836 11 178 15 749 15 749 15 749 15 708 16 015 16 303 Waste management 11 242 7 965 10 992 14 184 14 757 14 757 14 739 14 997 15 247 Other 4 – – – – – – – – – Total Revenue - Standard 2 63 102 73 625 103 918 102 259 105 507 105 507 106 573 109 585 112 632 Expenditure - Standard Governance and administration 17 921 13 394 23 163 32 918 34 860 34 860 31 000 32 714 34 634 Executive and council 2 612 3 775 7 823 10 352 12 578 12 578 12 993 13 566 14 344 Budget and treasury office 7 212 2 500 8 158 17 110 15 230 15 230 11 961 12 734 13 503 Corporate services 8 097 7 119 7 182 5 456 7 052 7 052 6 045 6 414 6 788 Community and public safety 1 365 2 103 2 436 4 748 5 239 5 239 5 518 5 832 6 155 Community and social services 1 105 1 909 2 288 3 649 3 737 3 737 3 958 4 189 4 425 Sport and recreation 37 81 120 433 470 470 485 508 534

Public safety – – 0 610 910 910 964 1 018 1 074 Housing – 5 – 20 12 12 13 13 14

Health 223 109 28 37 110 110 98 103 109 Economic and environmental services 6 667 9 482 9 615 9 020 10 663 10 663 11 308 11 980 12 647 Planning and development 2 809 3 321 1 794 1 075 1 519 1 519 1 606 1 695 1 786 Road transport 3 857 6 161 7 821 7 944 9 144 9 144 9 702 10 285 10 861 Environmental protection – – – – – – – – – Trading services 20 375 26 187 37 347 55 070 54 745 54 745 57 174 60 140 35 688

Electricity 12 093 16 202 17 684 28 167 25 620 25 620 27 768 29 165 3 069

Water 5 260 6 873 13 537 14 234 14 046 14 046 14 887 15 683 16 516

Waste water management 1 073 948 2 629 5 704 8 376 8 376 7 908 8 312 8 739 Waste management 1 949 2 163 3 497 6 967 6 703 6 703 6 611 6 981 7 364 Other 4 – – – – – – – – – Total Expenditure - Standard 3 46 328 51 166 72 561 101 756 105 507 105 507 105 000 110 666 89 125 Surplus/(Deficit) for the year 16 773 22 459 31 357 503 0 0 1 573 (1 081) 23 508 Current Year 2012/13 2013/14 Medium Term Revenue &

Expenditure Framework

(10)

10 FS161 Letsemeng - Table A3 Budgeted Financial Performance (revenue and expenditure by municipal vote)

Vote Description Ref 2009/10 2010/11 2011/12

R thousand Audited

Outcome

Budget Year 2013/14

Budget Year +1 2014/15

Budget Year +2 2015/16

Revenue by Vote 1

Vote 1 - Budget and Treasury Office 2 574 4 364 34 760 10 951 13 424 13 424 11 846 12 433 13 039 Vote 2 - Corporate Service Management 1 954 2 399 936 2 274 2 453 2 453 2 476 2 477 2 496 Vote 3 - Technical Department 57 987 65 842 67 436 87 204 87 825 87 825 90 428 92 882 95 340 Vote 4 - Council 587 1 021 787 914 890 890 865 852 848 Vote 5 - Municipal Manager – – – 916 916 916 958 940 910 Vote 6 - Technical Department – – – – – – – – – Vote 7 - [NAME OF VOTE 7] – – – – – – – – – Vote 8 - [NAME OF VOTE 8] – – – – – – – – – Vote 9 - [NAME OF VOTE 9] – – – – – – – – – Vote 10 - [NAME OF VOTE 10] – – – – – – – – – Vote 11 - [NAME OF VOTE 11] – – – – – – – – – Vote 12 - [NAME OF VOTE 12] – – – – – – – – – Vote 13 - [NAME OF VOTE 13] – – – – – – – – – Vote 14 - [NAME OF VOTE 14] – – – – – – – – – Vote 15 - [NAME OF VOTE 15] – – – – – – – – – Total Revenue by Vote 2 63 102 73 625 103 918 102 259 105 507 105 507 106 573 109 585 112 632 Expenditure by Vote to be appropriated 1

Vote 1 - Budget and Treasury Office 7 212 2 500 8 186 17 218 15 478 15 478 12 286 13 077 13 864 Vote 2 - Corporate Service Management 9 098 8 905 9 353 8 797 10 431 10 431 9 571 10 146 10 730 Vote 3 - Technical Department 27 407 35 986 47 116 65 389 67 020 67 020 70 149 73 877 50 187 Vote 4 - Council 2 612 3 775 4 875 5 798 7 172 7 172 7 266 7 701 8 143 Vote 5 - Municipal Manager – – 2 947 4 553 5 406 5 406 5 727 5 865 6 200 Vote 6 - Technical Department – – – – – – – – – Vote 7 - [NAME OF VOTE 7] – – – – – – – – – Vote 8 - [NAME OF VOTE 8] – – – – – – – – – Vote 9 - [NAME OF VOTE 9] – – – – – – – – – Vote 10 - [NAME OF VOTE 10] – – – – – – – – – Vote 11 - [NAME OF VOTE 11] – – – – – – – – – Vote 12 - [NAME OF VOTE 12] – – – – – – – – – Vote 13 - [NAME OF VOTE 13] – – – – – – – – – Vote 14 - [NAME OF VOTE 14] – – – – – – – – – Vote 15 - [NAME OF VOTE 15] – – – – – – – – – Total Expenditure by Vote 2 46 328 51 166 72 478 101 756 105 507 105 507 105 000 110 666 89 125 Surplus/(Deficit) for the year 2 16 773 22 460 31 440 503 (0) (0) 1 573 (1 081) 23 508 Current Year 2012/13 2013/14 Medium Term Revenue &

Expenditure Framework

LETSEMENG LOCAL MUNICIPALITY