A councillor has warned of a likely backlash should a proposed 7.5% salary increase for municipal staff go ahead.
The salary and wage collective agreement tabled in the agenda for the special council meeting on 29 August would cost Makana an additional R1 million a month in staff costs, which currently stand at 40.6% of the total municipal budget.
“We’re continuously increasing the salary cost without any way of subsidising it,” said councillor Darryn Holm. “I predict a backlash from the community. There are people who are hard-working and deserving, but we must also must look at the institution’s sustainability.”
The meeting was to table Makana’s draft Annual Financial Statement (AFS) – which came under heavy criticism from the audit committee chair for poor and incomplete information
Fruitless and wasteful expenditure was recorded in the draft as R25.9 million for 2018, irregular expenditure at R181.8m and Unauthorised expenditure at R356.6m.
Acting chief financial officer Colleen Mani and her team were widely praised for making the best of a bad situation, with councillors thanking them for the long hours they’d put in to overcome gaps left by the recently resigned CFO and IT problems.
One of these difficulties was the result of the shift from the municipality’s old financial system to the new Municipal Standard Chart of Accounts (MSCOA). “They don’t talk to each other,” a strained looking Mani said. “There are different classifications of expenses.”
Worse was a server crashing and data being lost. “There is still information we can’t access.”
On the R25.9 million in fruitless and wasteful expenditure, the report explained it as interest paid on overdue payments.
Notes to the R181.8m in irregular expenditure were that in one case, disciplinary steps and criminal proceedings had been undertaken. In another, an amount had been condoned.
Unauthorised expenditure at R356.6m was attributed to non-cash items under-budgeted for during the current year.
Interviews for the appointment of a chief financial officer were scheduled for 6 September.
High debt, little service delivery
Grocott’s Mail this week asked councillor Darryn Holm to elaborate on concerns he’d raised in the 29 August meeting.
Meetings of the oversight body for Finance in Makana, the Finance, Administration, Monitoring and Evaluation Portfolio Committee (FAME), had to be postponed three times because of no quorum.
This meant the Annual Financial Statement had gone straight to Council on 29 August, with no interrogation from the Committee. The Committee finally met on Tuesday 11 September.
Present throughout were Finance, Administration, Monitoring and Evaluation Portfolio Committee chair is Nombulelo Masoma, and councillors Mlindi Nhanha, Luyanda Nase and Darryn Holm. Mthunzi Fatyi and Mzwandile Qotoyi attended none. Thembakazi Seyisi and Mfundo Moya made up the quorum on the fourth attempt.
The committee is supposed to sit every quarter. Its job is to interrogate municipal finances. In particular, it is supposed to examine the financial statements before they are presented to Council.
“As FAME, we need to look at the balance sheet etc to see how figures are derived,” Holm said.
Debt
Makana’s debt is currently over R400m. “It has increased over the past year because we are paying R8m in interest without even getting to the capital. This means little capacity for service delivery.
Salaries
These remain 40.6% of Makana’s total budget. “The proposed salary increase of 7.5% would cost just under R1m. “We can’t approve that without finding ways to reduce costs.”
Holm, who is represents the DA, said proposals his party had made in this regard had been an investigation into overtime and a skills audit of the Finance department.
“It’s frustrating that both proposals have been thrown under the rug.”
Budgeted deficit
“Our revenue is based on a 90% collection rate. Even with that unrealistic target, we are planning to spend more than that 90%. In other words, we plan to spend more than we plan to make.”
