Over the years, we have witnessed many large projects that have changed the image of the city. We have allocated R10 million for the alternative housing technology pilot program and we will start the project next month in June. We are delighted that the private sector has responded positively to the investment opportunities available within the Cornubia development.
The IRPTN network will be within 800 m (10-15 minutes' walk) of more than 85 percent of the municipality's population.
ETHEKWINI MUNICIPALITY PROFILE
- VISION OF THE MUNICIPALITY
- MISSION
- LOCAL ECONOMY
- CLIMATE
- LAND USE
- STATE OF THE ECONOMY .1 OVERVIEW
- ETHEKWINI GDP PERFORMANCE
- AIRCRAFT MOVEMENT
- TOURISM
- BUILDING PLANS PASSED
- ECONOMIC / SOCIAL DEVELOPMENT
Dube Aerotropolis is expected to change the image of the northern area of the city as a major aerotropolis development. Durban's bustling port, one of the busiest in the world, which has contributed to the growth of the city and the province, is expected to reach capacity by 2019. Planning is currently underway in Verulam to streamline the public transport hub.
A world-class cruise ship terminal as part of the Point Waterfront development is available.
BUDGET OVERVIEW: EXECUTIVE SUMMARY
INTRODUCTION
In keeping with the city's goal of being the nation's sports and events capital, the city has secured the hosting rights for the Sports and Events Tourism Exchange convention for the next three years. According to the Global Destination Cities Index, Durban is expected to be the fastest growing tourist city in Africa for 2012 and one of the fastest growing tourist destinations in the world. Spending plans had to be reviewed and funds re-prioritized to ensure that key objectives were met.
In the fiscal year 2013/14, the municipality determined the following priority areas.
- INSTITUTIONAL TRANSFORMATION
- SERVICE DELIVERY STANDARDS, LEVELS OF SERVICES, OUTCOMES, TIMETABLE FOR ACHIEVEMENT AND FINANCIAL IMPLICATIONS
- FINANCIAL PERFORMANCE (2011/12 AND 2012/13): PARENT MUNICIPALITY
The municipality is strongly tackling service delivery backlogs and great progress has been made in recent years. Despite the effects of the global recession on the economy, the municipality managed to achieve a collection rate of 97.5% which is the best in the country. Mainly due to a strong balance sheet, the municipality has maintained its credit rating, the best in the municipal sector.
The borough's metropolitan police have collected approximately R8.7 million since the start of the amnesty period.
BACKGROUND TO THE BUDGET PROCESS
The following table compares the year-to-date capital budget with the actual year-to-date expenditure in the eight months ending February 2013. Capital expenditure at the end of February 2013 is approximately R1.9 billion, which is 35% of the budgeted amount. To date, approximately R2.8 billion has been received from all sources, representing 57.5% of the budgeted amount.
Allocations totaling R 300 million are a carryover from the previous financial year and are expected to be spent by the end of the year.
BUDGET SUMMARY
- MID TERM OUTLOOK: 2013/14 – 2015/16 CAPITAL BUDGET
- INFRASTRUCTURE EXPENDITURE TRENDS
Financial expenses consist mainly of interest repayment for long-term borrowings (cost of capital) and are equal to 4.1% of operating expenses. Revenues generated from fees and service charges form a significant part of the revenue basket for the city accounting for 67.7% of total revenue. An increase in the budget is due to an increase in the PTIS grant for the financing of transport infrastructure for the implementation of the IRPTN.
Commissioning of the Electron Rd transfer station and gradual closure of the Bisasar Rd R 120m landfill.
MAJOR ITEMS OF EXPENDITURE
- HUMAN SETTLEMENTS AND INFRASTRUCTURE Point pump station upgrade
- SUSTAINABLE DEVELOPMENT AND CITY ENTERPRISES Cato Manor ABM operational projects
- GOVERNANCE
- THEFT OF ELECTRICITY
- UNFUNDED MANDATES AND FUNDING REALITIES
- UNACCOUNTED FOR WATER (LOSS IN DISTRIBUTION)
- HOUSING / HOSTELS
Public-private partnership for effective control of the parking meter system in the city Electronic traffic control. The City Council has been leading the climate change revolution in local government for many years, with the most recent program being the development of the 'Durban Climate Change Strategy (DCCS)'. Given the large-scale investment in the water main replacement program, water losses are still a concern.
The allocation of the housing functions with full housing accreditation to the municipality with direct capital flow will help alleviate the situation.
ALIGNMENT WITH NATIONAL AND PROVINCIAL PRIORITIES
FINANCIAL STRATEGY, ONGOING VIABILITY AND SUSTAINABILITY
- FINANCIAL STRATEGY
- THE MUNICIPAL INFRASTRUCTURE INVESTMENT FRAMEWORK
- MUNICIPAL SERVICE FINANCIAL MODELLING FOR ETHEKWINI
- INFRASTRUCTURE DELIVERY MANAGEMENT SYSTEMS (IDMS)
The Municipality's depreciation policy is in accordance with the requirements of the Generally Recognized Accounting Practice Standards (GAAP). The municipality is committed to ensuring that all waste in infrastructure provision is removed. To determine the overall sustainability of eThekwini's finances, a Municipal Services Financial Model (MSFM) has been completed for the municipality.
In order to adapt the Infrastructure Delivery Management System (IDMS) to the municipalities, the municipality participates as a pilot in the program.
MUNICIPAL ENTITIES
National Treasury acknowledges that the eThekwini Municipality is well advanced in most of the infrastructure delivery process, particularly in terms of infrastructure planning and construction procurement. Accordingly, the Durban Marine Theme Park Board of Directors will manage the organization with its own staff, expertise and resources. In the medium term, it will move into a recapitalization phase with major upgrades required to ensure the park's longevity and continued visitation growth.
This idea will form a key part of the strategy moving forward into the era without a management company involved and together with the City, various options will be explored in terms of enhancing uShaka as a major drawcard for Durban.
BUDGET PROCESS
OVERVIEW
The mechanism by which the needs of the municipality are identified and prioritized is the Integrated Development Plan (IDP). The initial draft capital budget for the MTEF from 2013/14 reflected an oversubscription. A strategic approach has been taken with regard to capital budget prioritization using the Municipal Services Financial Model (MSFM) and access modeling tools.
Both the operating and capital budgets were evaluated through a prioritization mechanism that ensures alignment with the development strategy of the municipality.
The budget process AS PER MFMA
PROCESS FOR CONSULTATIONS WITH EACH GROUP OF STAKEHOLDERS AND OUTCOMES
In order to strengthen public participation, the municipality implemented its awareness program in all 17 areas during the year. Accordingly, the submission of the budget proposal to the council will be followed by an extensive publication of the budget documentation in the council's newspaper, Metro eZasegagasini. Electronic and hard copy copies of the submitted budget will be submitted to the National Treasury as well as the Kwazulu-Natal Provincial Treasurer and the Provincial Department of Cooperative Governance and Traditional Affairs.
In terms of the Municipal Systems Act and in conjunction with the Municipal Financial Management Act, budget hearings will be held in April 2013 in 17 zones in the eThekwini region, with each zone comprising five to seven wards.
SCHEDULE OF KEY DEADLINES RELATING TO BUDGET PROCESS
The management of the local government has a significant role to play in strengthening the connection between the citizen and the government's overall priorities and spending plans. The municipality is proud to enjoy a reputation for actively engaging as many of its citizens as possible in its planning, budgeting, implementation and monitoring processes.
BUDGET ASSUMPTIONS
- KEY FINANCIAL ASSUMPTIONS
- CREDIT RATING OUTLOOK
- BORROWING AND INVESTMENT OF FUNDS BORROWINGS
- PRICE MOVEMENTS ON SPECIFICS
- TIMING OF REVENUE COLLECTION
- AVERAGE SALARY INCREASES
- CHANGING DEMAND CHARACTERISTICS (DEMAND FOR SERVICES)
- ABILITY OF THE MUNICIPALITY TO SPEND AND DELIVER ON THE PROGRAMS
- COST OF SERVICE DELIVERY VS AFFORDABILITY
It will be seen that most of the capital is spent on 'Basic Service Delivery' infrastructure. At the end of the current financial year, cash and investments are expected to be approximately R5 billion. In this context, it is estimated that capital expenditure for 2012/13 will amount to 101.9% of the investment budget.
It is expected that 99% of the operating budget will be spent in the 2012/13 financial year.
MEASURABLE PERFORMANCE OBJECTIVES AND INDICATORS
- KEY FINANCIAL RATIOS / INDICATORS
- FREE AND SUBSIDISED BASIC SERVICES
- DRINKING WATER QUALITY AND WASTE WATER MANAGEMENT
To help the poorest of the poor, the municipality has developed a social welfare package to help those residents who cannot afford to pay for services (see section 9.2 for details). The estimated costs of the social package (i.e. loss of income) amount to approx. R 2.7 billion for the 2013/14 budget year. Details of the initiatives that the Council proposes to implement in this regard are detailed below.
The council's water and sanitation unit received a Green Drop award in 2011/12 in recognition of excellence in wastewater management.
BUDGET RELATED POLICIES: OVERVIEW AND AMENDMENTS
- ASSESSMENT RATES POLICY
- CREDIT CONTROL AND DEBT COLLECTION POLICY
- TARIFF POLICY
- WATER POLICY
- INVESTMENT / CASH MANAGEMENT AND BORROWING POLICIES
- VIREMENTS BUDGET POLICY
- ASSET MANAGEMENT PLAN
- ACCOUNTING POLICY
- FUNDING AND RESERVES POLICY
- BUDGET POLICY
- THE IDP STRATEGIC FOCUS AREAS
- DEVELOPMENT CHALLENGES
- MUNICIPAL KEY DEVELOPMENT DIALOGUES
- POLITICAL PRIORITIES AND LINKAGES TO THE IDP
- IDP OVERVIEW AND KEY AMENDMENTS
- IDP REVIEW PROCESS AND STAKEHOLDER PARTICPATION
- LINK BETWEEN THE IDP AND THE BUDGET
The development of the strategic approach for the municipality is guided by - but not limited to - the following; All operational and capital programs in the 2013/14 mid-term budget have been evaluated through a prioritization mechanism that has been developed to ensure alignment with the municipality's development strategy. The municipality is committed to addressing people's needs and values input from communities and stakeholders.
As set out in the Public Utilities Act (2000), the review of the five-year IDP requires a stakeholder consultation process.
OVERVIEW OF BUDGET FUNDING
- LOAN DEBT AND INVESTMENTS
- SAVINGS AND EFFICIENCIES
- INVESTMENTS – CASH BACKED
- GRANT ALLOCATIONS
- COLLECTION RATES FOR EACH REVENUE SOURCE
- LEVELS OF RATES, SERVICE CHARGES AND OTHER FEES AND CHARGES
68.5% of the operating budget is financed from metering rates and services (tariffs). 12.2 SOURCES OF FUNDING. Since salaries are the main expenditure of the operating budget, overtime will continue to be closely monitored. We will revitalize the Quality Circles program, which we have introduced so far in all departments of the Treasury Cluster.
The underlying principle of the quality management system is to ensure that all processes are documented and continuously reviewed for continued compliance and effectiveness. The purpose of the system is to track a new contract/tender through the various tender committees. The revenue collection rate is the cash collected from consumers expressed as a percentage of the billed amount.
Therefore, the determination of the effective property rate fee is an integral part of the municipality's budgeting process. A valuation date of July 1, 2011 has been set, with the implementation of the valuation list effective from July 1, 2012. The tariff increases are necessary due to the increased cost of bulk purchases, maintenance of existing infrastructure, provision of new infrastructure and to ensure the financial sustainability of services.
The increase in the collection rate for household waste over the year 2013/14 is mainly due to salary increases, the conversion of temporary employees to permanent employees and the increased costs of purchasing garbage bags. The revised approach will support the cost recovery of bulk infrastructure provision across all sub-regions.
DISCLOSURE ON IMPLEMENTATION OF MFMA AND OTHER LEGISLATION
SERVICE DELIVERY AND BUDGET IMPLEMENTATION PLAN (SDBIP)
STATISTICAL INFORMATION
BUDGET RELATED RESOLUTIONS
- ESTIMATES OF INCOME AND EXPENDITURE
- RECAPITULATION: VALUATION OF RATEABLE PROPERTY
- EXEMPTIONS, REBATES AND REDUCTIONS
- RESIDENTIAL PROPERTY
- PUBLIC BENEFIT ORGANISATIONS
- LIFE RIGHTS SCHEMES AND RETIREMENT VILLAGES
- SCHOOLS NOT FOR GAIN
- GUEST HOUSE UNDERTAKINGS
- BACK – PACKER LODGES, HOLIDAY ACCOMODATION AND STUDENT ACCOMMODATION
- NATURAL AND OTHER DISASTERS
- VACANT LAND
- MUNICIPAL PROPERTIES
- NATURE RESERVES AND CONVERSATION AREAS
- SPECIAL RATING AREAS
- PHASING IN OF RATES
- DATE OF OPERATION OF DETERMINATION OF RATES That this determination comes into operation on 1 July 2013
- ADMINISTRATION CHARGE ON ARREAR RATES
- OTHER TARIFFS AND CHARGES
- DOMESTIC WATER DEBT RELIEF PROGRAM
- ELECTRICITY DEBT RECOVERY USING THE 80/20% OR 50/50% PREPAYMENT SYSTEM
- BUDGET RELATED POLICIES
- CAPITAL EXPENDITURE ESTIMATE
- BORROWINGS TO FINANCE THE CAPITAL BUDGET
- HOUSING/HOSTELS DEFICIT
- MEASURABLE PERFORMANCE OBJECTIVES
- INTEGRATED DEVELOPMENT PLAN (IDP)
- PARTICULARS OF INVESTMENTS
- REMUNERATION OF COUNCILLORS AND SENIOR OFFICIALS
- UNFUNDED MANDATES
- OFF BALANCE SHEET FINANCING
