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LEGISLATIVE BACKGROUND

The Municipal Finance Management Act (MFMA) section 71(1) require an Accounting Officer of a municipality to submit to the Mayor and the relevant provincial treasury a statement in a prescribed format on the state of the municipality’s budget by no later than the 10^th working day after the end of each month. Furthermore section 71(7) requires provincial treasuries to make public a consolidated statement on the state of municipal budgets and those of its entities.

The Gauteng Provincial Treasury presents the state of the municipal financial report for second quarter of 2013/2014 in a conscious effort to assist lawmakers in monitoring and evaluation of service delivery issues; in order to make informed policy directives going forward.

EXPENDITURE MANAGEMENT (REVENUE AND OPERATING BUDGETS)

1. The aggregate operating revenue budget of municipalities in Gauteng for the 2013/2014 financial year is R94, 2-billion which indicates an 8% increase when compared to the 2012/2013 adjusted budget of R87-billion. The actual operating revenue to date amounts to R47, 6-billion representing 51% of the consolidated operating revenue budget.

2. Service charges accounts for 58% of the aggregate revenue while Property rates and Other revenue accounts for 18% and 9% respectively. Gauteng municipalities managed to contribute 5% of Other own revenue to date.

3. Metros accounted for most of the revenue billed amounting to R42, 3-billion or 89% of the aggregate revenue billed to date. While the Locals accounted for R5-billion 10% and the District accounted for only R376-million or 1%.

4. The aggregate operating expenditure budget amounts to R91, 8-billion which indicate a 7% increase when compared to the 2012/2013 adjusted budget of R85, 8-billion. The actual operating expenditure to date amounts to R43, 5-billion or 47% of R91, 8-billion.

5. The aggregated operating expenditure incurred by Metros is at the highest at R39-billion or 90% of R43, 5-billion, while 10% or (R4, 2-billion) is for the Locals and R297-million is for the Districts.

6. Figure 1 below indicates that Bulk purchases and Employee related costs are the highest contributors on the aggregate operating expenditure accounting for 39% and 25% of the aggregated expenditure incurred. Expenditure on Loss on disposal of PPE amounts to R454-million exceeding the budget of R25-million as a result of COJ who incurred an over expenditure of R421,5-million on R50 thousand budget and COT incurring an expenditure of R32,5-million without a budget.