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Pretoria - The coming municipal elections could seriously disrupt local authorities’ budgeting and financial affairs.
This is the message in a circular in which National Treasury warns municipalities against unrealistically low tariffs and promises of massive capital expenditure aimed at drumming up votes.
Treasury warns that the process of public participation with regard to the budgets could be abused by politicians in order to get votes.
Local government elections have to be held between March 2 and June 2, but the exact date has not been announced.
In the first half of the calendar year municipalities are very busy with their budgeting within a strictly legislatively prescribed framework.
The draft budget is normally tabled in council by March 31, after which begins a process of public consultation before the budget is considered and approved in May.
According to law all councils have to approve their budgets before June 30 so that they can start the new financial year, which begins on July 1, with an approved budget. Treasury has warned that this process could be disrupted by the elections.
Municipalities are allowed to adjust their tariffs only at the beginning of the financial year. If the new budget has not been approved before July 1, they lose the opportunity and the old tariffs apply. This could lead to an immediate financial crisis and a management takeover by provincial government.
Depending on the date of the elections, there could be enough time for each newly elected council to organise itself to consider and approve the draft budget before the end of June, said Treasury.
But there is a risk that a new council might want to alter figures and make a mockery of the process of consultation that has already taken place.
Nor should councils think that they can draw up an unrealistic budget in an effort to garner votes, and then alter it early in the new financial year. Revised budgets can be approved only after six months, namely after January 1 2012 – and the scope of permissible changes is limited.
- Sake24
For business news in Afrikaans, go to www.sake24.com.
This is the message in a circular in which National Treasury warns municipalities against unrealistically low tariffs and promises of massive capital expenditure aimed at drumming up votes.
Treasury warns that the process of public participation with regard to the budgets could be abused by politicians in order to get votes.
Local government elections have to be held between March 2 and June 2, but the exact date has not been announced.
In the first half of the calendar year municipalities are very busy with their budgeting within a strictly legislatively prescribed framework.
The draft budget is normally tabled in council by March 31, after which begins a process of public consultation before the budget is considered and approved in May.
According to law all councils have to approve their budgets before June 30 so that they can start the new financial year, which begins on July 1, with an approved budget. Treasury has warned that this process could be disrupted by the elections.
Municipalities are allowed to adjust their tariffs only at the beginning of the financial year. If the new budget has not been approved before July 1, they lose the opportunity and the old tariffs apply. This could lead to an immediate financial crisis and a management takeover by provincial government.
Depending on the date of the elections, there could be enough time for each newly elected council to organise itself to consider and approve the draft budget before the end of June, said Treasury.
But there is a risk that a new council might want to alter figures and make a mockery of the process of consultation that has already taken place.
Nor should councils think that they can draw up an unrealistic budget in an effort to garner votes, and then alter it early in the new financial year. Revised budgets can be approved only after six months, namely after January 1 2012 – and the scope of permissible changes is limited.
- Sake24
For business news in Afrikaans, go to www.sake24.com.
