Tshwane property rated to increase by 13%

“Property rates will increase with 13%; water tariffs will increase with 13%, and sanitation rates will increase with 13%,” said Executive Mayor Gwen Ramokgopa.

Ramokgopa tabled the city's R15.4 billion budget for 2009/10 on Thursday, 21 May 2009.

The mayor said the tariffs would be increased within the range of the Consumer Price Index principle.

Electricity rates will increase by 34%, owing to the Eskom Bulk electricity purchase tariff increase. Although the increase was not finalised, the National Treasury had advised municipalities to finalise their budgets accordingly.

The mayor said that the 34% increase in electricity tariffs would have a negative impact on the affordability levels of consumers resulting in an increase in bad debts which will further lead to cash flow challenges currently experienced by the city.

Cost-cutting strategies

Ramokgopa said the city's Executive Council had approved a number of cost cutting strategies to improve the cash flow position of the metro.

“In the last couple of months we started looking at prioritising projects, cutting some projects, slowing others, and funneling what resources we are going to spend into the highest, most strategic and highest return area,” Mayor Ramokgopa explained.

She added that the city would continue to remain vigilant in the monitoring and implementation of the approved cash flow strategy to curtail expenditure on non-service delivery projects until the economic crisis improved.

The credit control and debt collection policy will continue to be implemented robustly, said Ramokgopa, adding these strategies would assist to keep the city sustainable during the economic crisis.

Despite its shortcomings, the city has been able to settle its statutory obligations within the prescribed time lines.

The mayor said this week, the city's bank balance amount was R344.4 million, which was a negative balance, and the projected balance for the end of this month was R495 million.

“The council has agreed to enter into short-term bridging funding with certain financial institutions with the provision that the actual short term bridging debt incurred be limited to an amount of R500 million,” she said.

Challenge of escalating debt

One of the serious challenges that faced the city and other Metros in South Africa was escalating consumer debt.

The historical patterns of debt management inherited by the city, where some consumers were allowed to enter into debt arrangement to settle their accounts over an extended period, remained a challenge that the city was grappling with.

Meanwhile, in order to comply with Municipal Property Rates Act of 2004 (MPRA), the city will implement billing for the months of April and May in one invoice.

Double billing

The mayor said this would ensure that all the rates were levied within one financial year, meaning that the April and May charges for property rates will be reflected in this month's invoice.

“Residents should please note that the double billing on the May account is levied only on property rates and refuse removal.

“Electricity and water services will not be affected. This is a once-off billing to get the system up to date and comply with legislation,” Mayor Ramokgopa said.

According to the MPRA, when levying rates a municipality must levy the rate for a financial year. This act provides that a rate lapses at the end of the financial year for which it was levied.

The mayor said the city acknowledged the financial burden this would put on some ratepayers.

“It is with that notion that the city encourages the affected ratepayers to come forward and make payment arrangements with the City of Tshwane to pay off this amount,” she explained.

Article published courtesy of BuaNews