One of the biggest challenges facing the municipality in the near future is to create a. The tables and charts in the next few pages show the percentage composition of the revenue and expenditure for the 2014/15 Lukhanji budget.
Operating Budget Expenditure (R'000) Capital Budget Expenditure (R'000)
5 Annual Budget Tables (Operating & Capital)
6 Budget Related Charts and Explanatory Notes
OPERATING REVENUE BY SOURCE
CAPITAL EXPENDITURE BY VOTE
CAPITAL FUNDING BY SOURCE
Supporting Documentation
Lukhanji Municipality
Start of the third phase of the IDP (project discussions begin, preparation of the basic components of the IDP for submission no later than the end of February 2013). Presentation of the final draft of the implementation of services and the budget execution plan to the executive mayor for approval.
Political Oversight
Alignment of Budget with Integrated Development Plan
Each year the IDP must be reviewed as required by the Municipal Systems Act and MFMA. This section should give readers a good understanding of what is contained in the IDP and how it guides the allocations in the budget.
Vision
It is not the intention to append the IDP or to repeat everything in the IDP. However, it is critical that the user of the budget documentation gets a good high-level overview of the IDP and is directed to the detailed IDP documentation.
Mission
It needs to be reviewed in terms of performance in achieving results and outputs as the current financial position and future fiscal outlook for the municipality will directly affect results. The review should ensure that the plans are still within Lukhanji's financial capacity.
Value
LUKHANJI DEVELOPMENT TARGETS FOR 2014/2019
To improve the turnaround for handling disciplinary cases brought before the DC in less than 60 days from the date of initial charges by the end of 2015. To ensure that 90% of our households have safe places to dispose of their garbage and waste by the end of 2015.
The tables contained in the following pages attempt to align the draft budget with the IDP
The tables on the following pages attempt to adapt the budget proposal to the IDP. Some of these policies are existing policies that have been revised, while some are new policies to be considered by the Council for approval.
Free Basic Services
Investment of Funds, borrowing and cash management
Supply Chain Management Policy
Unforeseen and Unavoidable Expenditure Policy
Adjustment budget Policy
Debt Management Policy
Write Off Policy
Arrangements Policy
New Policies to be considered by Council
- IT Policies 2. Virenment Policy
- Interest Rates
- Equitable Share Allocation 118 301 000 127 277 000
- Water/Sanitation Subsidy 46 935 370 49 282 138
- New Capital Purchases 1 979 250 1 958 000
- New Debt Payments 378 479 374 415
- Library Allocation 4 150 000 4 150 000
Wages were expected to increase by 7.0%, but the new guideline in secular 72 prescribes that municipalities use the average CPI plus I percent, which is 6.79. The electricity tariff was expected to increase by 7.0%, but according to NERSA guidelines, the rate will be increased by 7.39%.
General inflation outlook and its impact on the municipal activities
Interest rates for borrowing and investment of funds
Rates, tariffs, charges and timing of revenue collection
VAT 23.94 Total 194.92
The aforementioned sharp increase in the water tariff was necessary for further investment in water infrastructure and the sustainability of the service for future generations. Collection rates for each revenue source and customer type (for more details see section 15 – revenue by source and voice.
Collection rates for each revenue source and customer type ( for more detail see section 15 – revenue by source and vote )
Average salary increases
The municipality has had to hire large numbers of employees in recent years, a large loan debt and a large population that simply does not have the income to pay the required rates and rates. The municipality has focused its attention on this in recent years.
Funded verses a Balanced budget: Table SA 10
Capital costs for own income Finance costs and loan repayment/own income. Debt coverage (Total revenue from operations - Donations from operations)/Debt service payments during the fiscal year).
Sources of Funding
Item Billed (000’s) Cash (000’s)
Property Rates
Electricity Tariffs
As shown in the rates listed in Appendix A, the costs for these customers are divided into several components, including a fixed component and several usage-based components.
Water and Wastewater Tariffs
Refuse Collection
EC134 Lukhanji - Supporting Table SA16 Investment Details by Maturity Investments by Maturity Ref Period for.
The following is a listing of grants included within the budget and a brief description of each
MUNICIPAL INFRASTRUCTURE GRANT
MUNICIPAL SYSTEM IMPROVEMENT PROGRAMME
LOCAL GOVERNMENT FINANCIAL MANAGEMENT GRANT
LOCAL GOVERNMENT SUPPORT GRANT
11.9 -Table SA 18 - Transfers and grant receipts
13 Disclosure on Salaries, Allowances and Benefits
EC134 Lukhanji - Companion Table SA23 Salaries, Allowances and Benefits (Political Office Holders/Councillors/Senior Managers).
14 Table SA 25 - Budgeted monthly revenue and expenditure Table SA 26 - Budgeted monthly revenue and expenditure
Municipal Vote)
15 Measurable Performance Objectives (Revenue Source and Vote)
16 Disclosure on Implementation of MFMA & Other Legislation
17 Budgets and SDBIPs – Departmental / Functional (internal)
TO BE INCLUDED IN FINAL BUDGET
18 Budgets and SDBIPs - Entities & Other External Mechanisms The municipality has no entities
19 Summary of Detailed Capital Plans
EC134 Lukhanji - Supporting Table SA34b Capital Expenditure for Renewal of Existing Assets by Asset Class. Sports pitches and stadiums Swimming pools Community houses Libraries Leisure facilities Fire, safety and emergencies Security and police.
Lukhanji Municipality BUDGET
APPENDIX A
RATES AND TARIFFS
The customer could supply all the material and perform the entire work, and the e-installation is handed over to the Municipality on the day of commissioning of the collection point. The funds now belong to the municipality, which will take care of all maintenance and repairs in the future.
ALTERATIONS AND ADDITIONS TO EXISTING SERVICES
FAILURE TO KEEP APPOINTMENTS FOR INSPECTION AND
FAILURE TO SUBMITT COMMENCEMENT FORMS
No conventional metering is allowed for single-phase residential and/or commercial supplies, except. iv) Dependents are eligible in accordance with the Indigenous Policy. All units include an NER-approved additional surcharge of 1.5 cents for upgrading. This rate does not apply to consumers who receive 50 kW of free electricity.
COMMUNITY SERVICES
BERRY & BONKOLO DAM USAGE FEES : VAT Inclusive
GAME RESERVE ENTRANCE FEES : VAT Inclusive
CEMETERY CHARGES
For animals delivered to the impoundment, either one or more per kilometer or part of a.
THOBI KULA INDOOR SPORT CENTRE FEES
Oxygen Resuscitation Apparatus plus refill charges Portable Lighting Equipment - 5kw unit per hour R100.00/hr Smoke Evacuation - During Operation R100.00/hr Smoke Evacuation - When Stationary R40.00 per hour. If the event is canceled for any reason, the monies in (a-c) above will not be refunded.
NOTE; All are Excluding the Overtime Costs of the Caretaker)
ADMINISTRATION AND HUMAN RESOURCES
APPENDIX B
NEW AND REVISED POLICIES
Lukhanji
Municipality
Write off Policy
- Introduction
- Authorisation Levels
- Detail of Debt To Be Written Off
- Write Off Criteria
Any property sold after the write-off is given the full amount to recover from the sale. Any property sold after giving the incentive, 50% of the amount to be recovered from the sale.
Arrangements Policy
Arrangements Policy Lukhanji Municipality
- Principles to be applied
- Arrangement Requirements for all Customers
- Domestic Indigent (or Destitute Indigent) Customers (with municipal electricity service) Arrangements
- Domestic Customer Arrangements
- Business Customer Arrangements
- Collection Processes
- Breach of Arrangements
The indigent customer will be expected to pay their current monthly bill regularly each month. The domestic customer will be required to pay 10% of the debt before arrangements can be made.
INDEX
PREAMBLE
DEFINITIONS
Principles
Duties and Functions
- Duties and Functions of Council
- Duties and Functions of the Executive Mayor 2.3 Duties and Functions of the Municipal Manager
- Duties and Functions of Communities, Ratepayers and Residents 2.5 Duties and Functions of Ward Councillors
Area of Application 4. Application for Services
Customer Service Agreements 6. Deposits and Guarantees
Metering of Consumable Services 9. Valuation
Customer Assistance Programmes 1 Water Leak Rebate
- Rates Rebate
- Arrangements for Settlement 10.4 Payment of Rates by Instalments
Government departments 12. Communication
Payment Facilities and Methods 14. Enquiries and Appeals
Debt Collection 16. Meter Readings
Reporting and Performance Management
Means the municipal manager or his nominee, who acts in accordance with § 100 of the System Act. Means the municipality's managing mayor or his nominee, who acts in accordance with § 99 of the System Act.
PRINCIPLES
DUTIES AND FUNCTIONS
- Duties and Functions of Council
- DUTIES AND FUNCTIONS OF EXECUTIVE MAYOR
- DUTIES AND FUNCTIONS OF THE MUNICIPAL MANAGER
- DUTIES AND FUNCTIONS OF COMMUNITIES, RATEPAYERS AND RESIDENTS
- DUTIES AND FUNCTIONS OF WARD COUNCILLORS
To monitor the performance of the Executive Mayor (Supervisory Authority) in relation to credit control and debt collection. To provide sufficient capacity in the Municipality's Finance Department for credit control and debt collection.
AREA OF APPLICATION
APPLICATION FOR SERVICES
CUSTOMER SERVICE AGREEMENTS
That they will provide the Council with all information and documentation required to assess the customer's creditworthiness. To provide the Council upon request with all information regarding bankruptcy, sequestration, administration and or any other legal impediment related to its status.
DEPOSITS
- The deposits are payable when new customers sign on and when existing customers move to a new supply address. Customers must pay a deposit
Consumer Deposits only apply to the account for which they were originally assigned and cannot be transferred by the municipality between customer service agreements. Before the City enters into a new agreement with a customer, the Customer will provide the City with information related to past City accounts to assist in its credit assessment.
ACCOUNTS AND BILLING
- Customers will receive one consolidated bill for all Lukhanji municipal services to a property, which is situated within the
- Accounts are produced in accordance with the meter reading cycles
- An account will be rendered each month in cycles of approximately 30 days
- The Municipality will undertake reasonable steps to have the accounts delivered to all customers. However non-receipt of an account does not
- Accounts must be paid on the due date as indicated on the account
- Payments for accounts must be received by
- Inter-Governmental Transfers
- Customers who have failed
The municipality will not enter into a contract without meeting this requirement and the municipal officer will carry out a check of previous municipal accounts. A late payment charge as set out in the Council's Tariff Policy will accrue if an invoice remains unpaid by the due date, regardless of the reason for the non-payment.
METERING OF CONSUMABLE SERVICES
- The municipality may introduce various metering equipment and customers may be required to convert to a system preferred by
- Customers who default (fail to pay by a due date) will be required by the municipality to convert to a prepaid metering
- Prepayment metering will be installed for all new domestic electrical and where applicable, non-domestic electrical
- Meters (credit) will generally be read monthly. Should circumstances prevent reading, the municipality is entitled to
- A customer is responsible to allow municipal officials access to their property to execute municipal functions and will accept any
VALUATION OF PROPERTIES
CUSTOMER ASSISTANCE PROGRAMMES
- WATER LEAK REBATE
- RATES REBATE
- ARRANGEMENTS FOR SETTLEMENT
- PAYMENT OF RATES BY INSTALMENTS .1 Owners may pay the property rates
- Interest shall accrue on all rates accounts if they are not paid by the due date as indicated on the account
A service fee will be imposed on customers who opt for monthly installments (or discounts for annual payments) to cover the administrative costs associated with this activity, as set out in the fee policy. Failure to maintain monthly installment payment for three (3) consecutive months will result in cancellation of the facility and all future installments become due.
GOVERNMENT DEPARTMENTS
PAYMENT FACILITIES AND METHODS
- Municipal payment and enquiry facilities will be maintained subject to acceptable levels of activity when compared to the
- The customer acknowledges that any agent used for transmitting payments to the Municipality is at the risk and
- A range of payment methods is available and may be extended as required subject to financial implications. The
- The Chief Financial Officer shall allocate payments according to pre-determined priorities
- The customer is not allowed to selectively nominate any monies paid by him for specific services .The allocation of
- No allegation for the non-receipt of an account will be exempted from the responsibility to pay on or before the due
- Officials and Councillors service accounts are to be deducted on a monthly basis from their salary / remuneration
- In terms of section (9) Schedule 2 of the Municipal Systems act and Municipal resolution dated 29 August 2003,Municipal
- The Municipality may enter into agreement with businesses and their employees for the business to deduct from and pay
In addition, the customer must consider the transfer time of each broker. The municipality will actively monitor the effectiveness of payment options, methods and benefits for customers.
ENQUIRIES AND APPEALS
- Any customer who has a query/dispute concerning his service account or on the application of the credit control and debt
- A customer who has lodged a query/dispute is not relieved of
- The customer will receive a written response to a submitted written query within 10 working days of the query being
- If a customer is not satisfied with the response received from the Customer Care Office or the CFO he may make a written
- The testing of a water or electricity meter may be done on request of the customer upon payment of the prescribed fee,
In case of non-payment, a debt collection procedure will be initiated against the customer. If the complaint alleges that the metering device is inaccurate, the device must be subjected to a standard industry test to determine its accuracy, and the customer must be advised of any costs, including the estimated cost of such test, as set forth in this policy section, before such test is performed.
DEBT COLLECTION
- Disconnection / restriction of metered services for all overdue rates and service accounts
- Barring from buying prepayment services by debtors who are in arrears with all overdue rates and service accounts
- Allocating a portion of any payment for prepayment services to arrear debt
- Insisting that a prepayment meter be installed
- Withholding of rates clearance certificates under certain conditions. (Refer to section 118 of the Systems Act of 2000.)
- Withholding payments of grants-in-aid
- Any other method authorised by Council
METER READINGS
THEFT AND FRAUD
First offense: R1050.00 for disconnection at the pole and meter removal as well as an estimate of loss of income. Third offense: R5000.00 for disconnection at the pole and removal of the meter, as well as an assessment of lost income and the full unpaid debt.
APPLICATION OF THE POLICY
2nd Offense: R2100.00 for the double tamper for unplugging the pole and removing the meter and full service as well as an estimate of lost revenue.
PROVINCE OF THE EASTERN CAPE
LUKHANJI LOCAL MUNICIPALITY
GIFT,REWARDS AND FAVOURS POLICY
Lukhanji Local Municipality
Other matters
- Definitions
- OBJECTIVE
- GENERAL PRINCIPLES
Accountant” means the head of the municipal administration and the accountant of Lukhanji Local Municipality appointed by the council in accordance with section 54A of the Local Government: Municipal Systems Act No. Chief Financial Officer” means an officer of the Lukhanji Local Municipality appointed as such under section 80(2)(a) of the Municipal Finance Management Act;.
SECTION 9 STATES
SECTION 8 STATES
- Value of Gifts, Rewards or Favours
- Register of Rewards, Gifts and Favours
- Responsibility of Councillors and Staff Members
- Authority to Accept Rewards, Gifts or Favours
- Accountability
- Enforcement
Receipt of gifts in any of the following scenarios would prima facie be considered a breach of item 8 of Schedule 2 of the Systems Act: and item 47 of the Municipal Supply Chain Management Regulations. The electronic register will be managed and maintained in the municipal director's office, and internal audit should review it from time to time.
LUKHANJI LOCAL MUNICIPALITY
ASSET DISPOSAL POLICY
SUPPLY CHAIN MANAGEMENT UNIT
SUPPLY CHAIN MANAGEMENT FRAMEWORK/GUIDE TO ACCOUNTING OFFICER
INTRODUCTION
The aim of the Asset Disposal Policy is to provide a framework for the disposal of the municipality's assets which are not necessary to provide the minimum level of basic municipal services and which are surplus to the municipality's requirements.
- OBJECTIVE
- SCOPE
- DEFINITIONS
To advance the government/province's broader social, economic and environmental policy objectives through the disposal of assets. This policy will apply to all redundant, obsolete, unserviceable assets, namely vehicle, office furniture, office equipment, computer equipment, other machinery and equipment and inventory.
TREASURY REGULATION
Treasury Regulation 16A3 stipulates the following
16A7.7 The accounting officer or accounting authority shall, when disposing of computer equipment, first contact any government institution involved in education and/or training to determine whether such institution has a need for such equipment. In the event that the computer equipment is required by such government institution, the accounting officer or accounting authority may transfer such equipment to the identified institution free of charge.
Treasury Regulation 10.1.1 and 10.1.2 state
The Accounting Officer must ensure that processes [whether manual or electronic] and procedures are in place for the effective, efficient,
16A7.1 Disposal of movable property must be done at a market-related value or in the form of price offers, competitive bids or auction, whichever is most advantageous to the state. 16A7.2 Notwithstanding the provisions of section 16A7.1, the accounting officers and accounting authorities may transfer chattels to other departments, constitutional institutions or public entities free of charge by means of formal attachments.
DISPOSAL
ASSET
ASSET REGISTER
REDUNDANT ASSETS
OBSOLETE ASSETS
UNSERVICEABLE ASSETS
SERVICEABLE ASSETS
CIRCULATION
COUNCIL
Council means the Municipal Council of Lukhanji Local Municipality, its legal successors and its delegates. The Chairman of the Disposal Committee shall be a senior independent officer of Supply Chain Management who does not control any assets.
CHAIRPERSON: DEPARTMENTAL DISPOSAL COMMITTEE
DEPARTMENTAL DISPOSAL COMMITTEE
CONFIRMING AUTHORITY
SELL BY QUOTATIONS/TENDER
DISPOSAL CERTIFICATE (VA27)
ACQUISITION OF ASSETS
MARKET VALUE
Market value is defined as “the estimated amount for which an asset could be exchanged between a willing buyer and willing seller on the date of valuation.
FAIR VALUE
CARRING AMOUNT
SUBSTANTIVE ASSSET VALUE
DEPRECIATION
ACCUMULATED DEPRECIATION
BASIC MUNICIPAL SERVICES
KINDS OF MOVEABLE ASSETS MANAGED BY THE MUNICIPALITY
APPLICABLE LEGISLATION
TREASURY REGULATIONS
BROAD BASED BLACK ECONOMIC EMPOWERMENT ACT
ASSET MANAGEMENT GUIDELINES
- ROLEPLAYERS & THEIR FUNCTIONS 1 ASSET MANAGEMENT OFFICIALS
- MUNICIPAL DISPOSAL COMMITTEE
- COMMON REASONS FOR DISPOSING OF ASSETS
- DEPRECIATION ON DISPOSAL
- PROCESS OF ASSET DISPOSAL
Detailed records of the disposal committee's activities must be kept at all times. The Confirming Authority is responsible for assessing and approving the recommendations of the Disposal Committee.
ASSESS THE CONDITION OF ASSETS
NB: The Confirming Authority cannot re-delegate his/her functions delegated by the Accounting Officer. The Confirming Authority must ensure that the chairman of the Exemption Committee has signed the Exemption Certificates before he/she approves the certificates.
DECIDE WHICH ASSETS ARE TO BE DISPOSED ESTIMATE THE MARKET/ NET REALISABLE
FACTORS TO CONSIDER IN DISPOSAL
SELECT THE APPROPRIATE DISPOSAL METHOD
OBTAIN APPROVAL FOR THE DISPOSAL
PROCESS
PREPARE FOR DISPOSAL
ESTABLISH CONDITIONS OF DISPOSAL EFFECT THE DISPOSAL
RECORD THE DISPOSAL PROCEDINGS EVALUATE THE DISPOSAL PROCESS
Estimate Value of the Asset
It is therefore necessary to carry out a valuation for each asset before disposal to ensure compliance with the above regulation and to seek the approval of the Accounting Officer if it is not considered possible or beneficial for the State to dispose of the asset at market value.
Methods of disposal
- Different methods to which assets can be disposed off
- Disposal by means of selling per price quotation, competitive bid or auction or by means of an auction to all registered buyers
For assets with a value of less than R200 000, an advertisement inviting the public must be placed in local councils and wherever possible. For assets valued at more than R200,000, an advertisement inviting the public must be placed on local boards, websites and local newspapers that are widely read in the specific area where the auction/bid sale is to be held.
Selling by means of price quotations
The closing date and time of the auction/sale upon registration and the assessment criteria to be used must be clearly stated in the advertisement. If it is not possible to obtain three offers, the reasons are recorded and the offers received are registered.
Selling by Public Auction
Assets valued above R30 000 are subject to the PPPFA, its regulations and the relevant applicable SCM policy, and the goods will also be sold to a bidder who has a valid tax payment certificate.
Competitive bids
Conditions of Sale
- Disposal by means of donation
- Disposal by means of Writing-Offs, Scrapping or Destruction
- PREPARING GOODS FOR DISPOSAL
- UPDATING THE ASSET REGISTER
- THE ACCOUNTING TREATMENT AFTER DISPOSAL OF ASSETS
- Assets no longer in use
- Assets beyond economical repair
- Asset Transfers between Municipality and Entities
- Asset Disposal
- Assets Written Off
- CONFLICT OF INTEREST
- POST DISPOSAL REVIEW
- COMPLIANCE WITH MFMA
- MONITORING AND EVALUATION
- POLICY REVIEW
When assets are written off, the book value or book value of the assets will be removed from the Asset Register. Asset disposal will require the removal of the book value or book value of the asset in the asset register.
Appendix A
This Policy is reviewed every two (2) years from the Effective Date to determine its effectiveness and appropriateness. Before then, this policy may be judged necessary to reflect substantial organizational changes required by law and regulation.
Assets applicable to this Policy
Furniture and fittings shall include but are not limited to
Information Technology (IT) equipment shall include but is not limited to
Office equipment and kitchen appliances shall include but are not limited to
Preparations, Recommendation and approval of policy
Recommended / Not Recommended
MANAGER: SUPPLY CHAIN MANAGEMENT UNIT DATE
Recommended / Not Recommended _____________________
DATE
Approved / Not Approved __________________
ACCOUNTING OFFICER DATE
LULHANJI LOCAL MUNICIPALITY FIXED ASSET POLICY AND PROCEDURES
JUNE 2012
