City of Joburg fails to pass reworked budget, which could have major consequences

The budget which the CoJ debated on May 15 drops the rates increase, raises the electricity increase and fiddles the capital expenditure to make residents think there is more money, but failed to pass in a late-night vote.

Image: OUTA

JoburgCAN, an initiative of the Organisation Undoing Tax Abuse (OUTA), welcomes the fact that the previously proposed rates increase was dropped from 4.8% in the draft budget to 3.8% in the update. However, the adjustment reduces the rates revenue prediction by about R170m and does not reallocate that funding from other forms of collection.

The average electricity tariff increase is now set at a higher 12.72%. The draft budget set this at 10.7%.  “Curiously, the increase in electricity tariffs does not result in any change in the electricity revenue prediction. The proposed new fixed monthly charges for prepaid (high usage) electricity have been cut from R553.73 to R230 (incl VAT). However, the per kWh charge block structure for prepaid high usage has changed, from blocks of 500kWh to smaller blocks, resulting in higher bills for power usage. The prepaid domestic tariffs are incoherent, with the high-use block for prepaid low-usage costing more than on the prepaid high-usage tariff. The draft version of these tariffs was similarly incoherent,” says Julia Fish, manager of JoburgCAN.

On Tuesday the MMC for Finance, Dada Morero, delivered the City’s budget speech to council and residents, but he failed to explain how public input shaped changes and amendments.

“For instance, the capital budget has been changed. There’s an overall increase of about R173 million for the upcoming year, no change for 2025/26, then an increase of R500 million in 2026/27. We have seen this type of budgeting before – when the outer year is full of promises which are not kept, but used to make the medium-term numbers look better. This is not realistic budgeting,” Fish says.

“Opposition parties raised this in their debates of the budget speech. Technically the budget has shrunk, as increases have been made to expenditure while the income has remained the same from the previous 2023/24 budget before it was adjusted down. Figures are allocated year on year for interventions like CCTV cameras, but where has the money from last year been spent and why is more needed for the same items in this budget?” Fish asks.

The medium-term capital budget contains R4.172 billion for City Power, R3.031 billion for water infrastructure and R1.465 billion for sewerage infrastructure.

The MMC said in his speech that the City of Joburg is “contributing over R628 million to leverage and unlock the Northern Wastewater Treatment Plant value at over R4 billion”.

Fish questions this statement. “The draft budget contained spending of R418 million over three years for this, while the updated budget has indeed increased the total to R628 million. However, the spending for the upcoming year remains at R168.5 million with the promised “extra” all loaded into the third year. This is wishful-thinking budgeting, in the hope that the City will find some money for that last financial year.”

The City’s capital budget for water infrastructure gets another R10 million in the upcoming year, with the promise of another R282 million in the third year. Fish calls this “more wishful thinking”.

The budget allows a little more for the red fleet (fire engines): it goes up from R252 million in the draft to R398 million in the update. But, Fish remarks, yet again this increase is all loaded into the third year, with the spending for the upcoming year stuck at R100 million.

“We also note that MMC Morero says that a feasibility study has been completed for the transfer of electricity supply rights from Eskom to the City for Soweto and Sandton. Where is this costing and plan in the budget? We note the promise of public participation on this and hope it is genuine.”

According to Fish, the budget debate was “at best frustrating and at worst a sign of serious instability in the governing of the City, resulting in very little being accomplished and the budget not being approved. A second sitting must now be called in the next week.”

Fish warns that this process must be repeated until a budget – and all revenue raising measures – is approved. “Failing that, the provincial executive will have to intervene, which could result in the council being dissolved and placed under administration, or a temporary and drastically scaled operating budget according to National Treasury Guidelines will have to be approved,” she explains.

“Judging by the split in the Government of Local Unity – with the PA voting against the budget, and EFF not voting at all it – it is imperative that the changes being made to pass the budget are transparent and communicated. It’s clear that in the budget’s current state, we will not have a successful vote in council, which could have serious ramifications. But the people of the city are the ultimate beneficiaries of the budget and cannot be traded for political tools in this process,” Fish emphasises.

UPDATE: The City of Joburg passed the 2023/24 budget on Wednesday 22 April 

Votes: 145 Yes, 10 No, 0 Abstained (however the DA caucus was not in attendance due to a party election rally so should be noted as abstaining)

Changes made to the budget include a R2m allocation to old stadium and swimming pool refurbishment in Eldorado Park as the community was omitted in the IDP. The prepaid electricity levy was adjusted to R230.

JoburgCAN – in collaboration with its affiliate members – gave substantial input into the IDP and budget (see here: https://www.outa.co.za/blog/newsroom-1/post/joburgcan-submission-calls-on-joburg-to-rewrite-budget-1342). “We have attended the public hearings and council sittings and will continue to follow the process closely to ensure that the budget is fair, fit, and feasible.  The resilience of Joburg is of importance to the whole fiscal structure of the country.”

More information

A soundclip with comment by JoburgCAN Manager Julia Fish is here.

JoburgCAN’s submission to the City is here and the annexures are here and here.

More on JoburgCAN is here.

JoburgCAN is an initiative of OUTA and was established to improve service delivery, engage in local government affairs, and foster community within the City. JoburgCAN represents affiliates and supporters residing in all seven regions of the City. As a properly established community-based organisation, JoburgCAN acts in unity and on behalf of its affiliates and supporters.