Overstaffed municipalities pushed into red

Overpaid public servants, along with overstaffing and dubious financial decisions, has left several Western Cape municipalities drowning in debt.

And Local Government MEC Anton Bredell has criticised at least two municipalities which had approached the national government for a portion of the equitable share funding – intended to be used for poverty alleviation – to address the cashflow shortage to pay staff salaries.

Although it was not illegal, he stressed that it was “highly immoral” to use these funds for anything but poverty relief.

The equitable share funding is an unconditional grant given to municipalities by the government, and both Beaufort West and Kannaland municipalities have already asked for their share.

In addition, Bredell has warned that along with the Beaufort West and Central Karoo District municipalities being plagued by financial woes, at least three DA municipalities – Overberg, Eden and Bitou – are also headed for trouble.

Touching briefly on the subject during his Local Government budget speech last week, Bredell said: “Managers who are unable to do the work, and who will not stand in the way of illegal decisions, are appointed… The time has come to stop the blatant contempt of the law by some councils.”

Bredell told Weekend Argus that while not all the municipal coffers had been hard hit, Beaufort West had had to pay staff late last month due to cashflow problems.

It is the district municipalities that are worst affected.

“Some of these municipalities came to me to say they do not have money. They know they are heading for financial trouble and they asked for help. That’s doing things the responsible way,” he said.

In the case of Beaufort West, the municipality failed to pay staff salaries at the end of last month. They finally secured the funding by approaching the national government to get access to their equitable-share funding.

Earlier, Bredell criticised the Beaufort West municipality for, without his approval, as is required by law, instituting a five percent salary increase for councillors.

The increase was in line with Minister of Co-operative Governance and Traditional Affairs Richard Baloyi’s announcement in December that all councillors were eligible for this increase, backdated to July, 2011.

Bredell has now warned that several municipalities will have to start cutting their operating budgets and may have to look at cutting staff.

While Bredell praised the Bitou, Overberg District and Eden District municipalities for deciding to forfeit their five percent salary increase for councillors, opting to rather pump the funds into service delivery and special projects, he warned that even that might not be enough.

Last year the embattled Overberg District municipality was forced to use an overdraft to pay staff.

The municipality’s salary bill is an average R4.7 million a month.

Of the 10 municipalities he checked recently, Bredell revealed that they were all spending between 70 percent and 90 percent of funding on the operating budget, leaving almost no capital for projects.

“The budget for municipalities is split into an operating budget and a capital budget, and we cannot have a situation were operating budget far outweighs the capital budget.”

Asked to comment, Bitou municipal manager Memory Booysen said that the municipality had inherited a projected cash deficit of R30m.

Booysen said that in past budgets expenditure was sanctioned by the council without enough money to finance the cost. He blamed previous officials for providing misleading figures. They were also grappling with fuel and electricity price hikes.

Overberg District Municipality mayor Lincoln de Bruyn said he could not comment without having the necessary facts and figures at hand.

But on the municipality’s website, De Bruyn’s adjustment budget in his mayor’s report said the municipality was in “a dire financial position”, and that unless “drastic measures” were taken, the “municipality’s sustainability is in serious doubt”.

They were budgeting for a deficit of about R7.5m.

Kannaland municipal manager Morne Hoogbaard conceded that they too were facing financial problems. But management was implementing a turnaround strategy that would focus specially on credit controls and debt recovery.

He said that Kannaland was fortunate to not have an overdraft facility, and that they were working to ensure “we do not go into the red”.

The Beaufort West, Central Karoo District and Eden District municipalities did not respond to media inquiries.

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