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Budget a ‘balancing act’

Electricity and refuse removal are two of the municipal services that may increase above the cost of inflation in the next financial year.

A preview of the proposed 2019/’20 Draft Budget for Overstrand Municipality was presented by the Executive Mayor, Dudley Coetzee, at the Overstrand Advisory Forum meeting on Thursday, 28 February 2019.

The Mayor referred to the challenging task of balancing the cost of providing basic services to the residents of the Overstrand, as well as tourists to our area, with the income the municipality is able to generate from these services.

“This year is no different in that respect,” he said. “However, this year the restoration of the damage to infrastructure following the devastating fires that ravaged the Overstrand, the civil unrest of 2018 and the present state of our country’s economy make our challenge even greater.”

Coetzee said it is projected that inflation this year will reach 5,3% and increase to 5,6% during the next financial year. “The directive to the administration has been to limit increases in those services that we can control to 5,7% in the 2017-’18 Draft Budget,” he said. “It is against this background that we prepared the 2019/2020 Draft Budget.

“A further challenge that we are again faced with is the above inflation salary increase government approved for municipal employees.

“When the notch increases, which average 2%, and other allowances are added to the 6,2% salary adjustment, the increase is closer to 8,2% per annum for three years,” he added.

“The rebate on property rates offered to persons over the age of 60 remains unchanged. The parking tariffs in the Hermanus CBD remain unchanged.

“Calculating the sewerage charge for water borne sewerage on 70% of potable water consumed with a cap of 35 kl also remains unchanged.

Electricity“In preparing this draft budget we have continued to move towards ensuring that our basic charges cover the cost of providing the service and that the tariff covers the usage.”

Coetzee says the water, sewerage and refuse services meet this criteria.

He continued to explain that the cost of providing electricity is still subsidised by the consumption tariff. Nersa has requested a 15% increase in the electricity tariff charged by Eskom to municipalities.

“For the purpose of compiling this Draft Budget we have assumed an increase of 15% in the tariff for electricity charged by Eskom to municipalities,” the mayor said.

“In line with our strategy that the basic charge for a service should cover the cost of providing the service, the basic charge for electricity increases by 17,5% and the unit charge has been increased by 14% for the first 350 kWh, 14,5% for 351-600 kWh and 15% above 600 kWh. ”

This results in a cost increase of about 15% for all domestic electricity users based on a 15% increase requested by Eskom.

Other proposed tariffsIt is proposed to increase Property Rates across the board by 5,7%.

The tariff for sewerage and water also increases by 5,7%.

Mayor Coetzee said the exception here is the tariff for 0-6kl of water, which increases by 11,5% or an increase of R3,46 per month. This is in line with a National Treasury directive that the level and structure of water tariffs are to be fully cost reflective. At present, the cost of providing water is around R23,40 per kl excluding VAT.

The tariff for refuse removal unfortunately increases by 12,86% to cover the cost of a new refuse cell at Karwyderskraal, as well as moving the Hermanus Refuse Transfer site.

Sundry tariffs increased by 5,7%. The cost of A4 photo copies remains unchanged to make it affordable for learners to make copies of documents. The building plan fee for alterations of less than 80 m² in a government subsidised housing scheme has been reduced from R463 to R250.

The 2019/’20 Draft Budget will be open for public comment after it is tabled to Council on 27 March.


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