Tshwane mayor Cilliers Brink says the city's expenses exceed its income, adding that cash flow problems were bound to occur, which led to delays in paying service providers.
The city's inability to pay service providers recently resulted in diesel shortages.
Sowetan understands the municipality eventually made payments to its service provider to continue supplying the city with diesel.
The draft budget report which was tabled in council on Friday reveals that the city has a deficit of R3.3bn, raising concerns that it might not be able to meet its financial obligations.
The report reads in part: “A key challenge is the mismatch in timing between receiving funds from debtors and payments due to employees and creditors. High levels of debtor nonpayment and receipt delays will require more working capital, which could result in cash flow challenges.
“The city will not be able to meet its financial obligations for 2023/24. The budget indicates a budget deficit of R3.3-billion.”
Brink said when he was elected on March 28, he was clear about his number one priority, namely to get control of the city’s finances.
“I identified three principal reasons for the city’s financial difficulty. First, national government failure. Eskom load shedding is causing billions in losses as electricity revenue is foregone and damage is done to infrastructure. Repairing this damage depletes repairs and maintenance budgets.
“The budget is underfunded, and so we are working with National Treasury on a funding plan. This will involve difficult decisions. An energy independence task team has been appointed, and the city will release a request for proposals on how our energy assets including the not-in-use Pretoria West and Rooiwal power stations can be leveraged in conjunction with the private sector,” Brink said.
For the new financial year, employees as well as councillors will not receive salary increases.
While the 2023/2024 draft budget was noted, the city failed to pass its adjustment budget as per the extension granted by the Gauteng provincial treasury.
In his letter granting a second extension to the municipality, finance MEC Jacob Mamabolo wrote: “Failure by the municipality to adhere to these measure would be regarded as persistent breach of the MFMA (Municipal Finance Management Act) and its regulations and which as you know could lead to a mandatory provincial intervention.”
SA Municipal Workers Union Tshwane regional chairperson Nkhetheni Muthavhi said the union would fight the zero increases.
“Both the draft budget and the adjustment are not talking to the poorest of the poor. The adjustment budget you’re seeing now is in limbo.
“We’re going to fight them because our standing agreement indicates how much the increases should be. This doesn’t even talk to inflation,” Muthavhi said.
The adjustment budget was not passed as it only got 107 votes instead of 108 which is needed to pass budget items.
Asked on Sunday if the province would intervene, Mamabolo said he would need to look at the facts before commenting.
nkosin@sowetan.co.za
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