2010/11 Medium Term Revenue and Expenditure Framework (MTREF)

Modimolle Local Municipality

2010/11 Medium Term Revenue and Expenditure Framework (MTREF)

“… an organisation delivering affordable services in order to improve the quality of life to all its communities”.

Contents

Part 1 – ANNUAL BUDGET

1.Mayors’ Report

2.Budget resolutions

2.1 Approval of income and expenditure

2.2Approval of tariffs and rates

2.2.1.Electricity

2.2.2.Water

2.2.3.Refuse removal

2.2.4.Sanitation

2.2.5.Property Rates

2.2.6.Indigent tariffs

2.2.7.Charges: Town Hall and Sundry Services

3.Executive summary

3.1 Operating Revenue

3.2 Operating Expenditure

3.3 Capital Expenditure

3.4 Challenges

4.Annual Budget Tables

Part 2 – SUPPORTING DOCUMENTS

1.Overview of the annual budget process

2.Overview of alignment of budget with Integrated Development Plan

3.Measurable performance objectives and indicators

4.Providing clean water and managing waste water

4.1.Description of water works

4.2.Catchment and raw water source evaluation

4.4Distribution Risk Evaluation

5.Overview of budget related policies

6.Overview of budget assumptions

7.Overview of budget funding

8.Expenditure on allocations and grant programmes

9.Allocations and grants made by the municipality

10.Councillors allowances and employee benefits

11.Monthly targets for revenue, expenditure and cash flow

12.Annual budgets and service delivery and budget implementation plans

13.Contracts having future budgetary implications

14.Capital expenditure details for 2010/11

15.Legislation compliance details

16.Budget Related Policies

17.Quality certification

Part 3 – ANNEXURES

Annexure A: Supporting Charts

Annexure B: Integrated Development Plan

Annexure C: Sundry Tariffs

Part 1 – ANNUAL BUDGET

1. Mayors’ Report

HONOURABLE SPEAKER

HONOURABLE COUNCILLORS

THE MANAGEMENT TEAM

LADIES AND GENTLEMEN

MODIMOLLE COMMUNITY

DUMELANG, GOEIE MIDDAG, GOOD AFTERNOON, THOBELA, HINHLEKANE, NDI MASEARE A BODE

Honourable Speaker allows me to present to you the Budget for 2010/2011 financial year.

This is the last budget presentation to Council before the 2011 Local Government Election. For the past 5 years in Council we have been mandated by the community and our organisations to address the needs of our community. We can proudly say as the ANC led municipality that we managed to change the lives of our community. With the contributions of our Sector Departments we have been able to achieve the ideals of a society free of poverty and deprivation.

In the words of President Zuma:

“The defining feature of this administration will be that it knows where people live, understands their needs, and responds faster. Government must work faster, harder and smarter”

Honourable Speaker

We are presenting this budget while we are celebrating Child Protection Week. This is the thirteenth year of the Annual National Child Protection Week Campaign to educate and mobilize communities to put children first. Our children are our future.

Our Government has taken a staunch comprehensive action plan to mitigate all risks associated with World Cup to ensure that all children are protected from criminal activities. As the municipality, we are committed to protection and the promotion of children’s rights in partnership with civil society.

Let me quote from Tata Nelson Mandela’s speech at the opening of South African Parliament in

May 1994.

“Our single most important challenge is therefore to help establish a social order in which the freedom of the individual will truly meanthe freedom of the individual. We must construct that people centered society of freedom in such a manner that it guarantees the political liberties and the human rights of all our citizens”

The 2009 Election Manifesto highlighted many economic achievements of the ANC Government over the last 15 years. We also note many social and economic issues which still need to be addressed.

The following socio-economic challenges were identified within the Modimolle Local Municipality:

• High influx of people and growing urbanization
• Higher HIV/AIDS Infection rate
• Limited supply of skilled labour
• High poverty incidence
• Limited access to basic services and
• Limited productive activity in the primary economic sector

Modimolle has potential to possess great economic development. Extension 2 area in Modimolle can serve as a link between the development east of the railway line and main town.

Vaalwater Town has no land available for future development which will fairly address disjointed, mixed and large spread developments. With the presentation by one service provider that Vaalwater can be a tourist hub like Hoedspruit we have to speed up and facilitate the development in that area.

Alma is surrounded by agricultural sector. We need to provide basic services in order to support food production and facilitate micro processing plants in that area of our municipality.

The budget, as presented to you today, will inform the community of Modimolle about the projects of the current fiscal year.

Honourable Speaker

We have made some commitment that most of the allocation should be directed to capital projects water, sanitation, roads and electricity. We are still using the set priorities that were raised during our IDP Budget road show of which water, roads and human settlement were the most important aspects to be looked at in the Budget.

The situation in Vaalwater about water is temporarily addressed with the agreement of adding the extra pipe line to supply water.

Colleagues will agree with me, with the huge development at Lephalale the surrounding town will have to develop and Vaalwater will be one of those. However, we have to build storage for water and continue our search for a permanent alternative to ground water.

We are proud to announce that the process of upgrading Donkerpoort dam will help us to have enough source which will cover future development.

On sanitation in Vaalwater, tenders are being adjudicated for the laying of sewer pipes so that we can eradicate the so called honey sucker which is also called septic tanks. We are within the set targets of the government to eradicate the demeaning sewer system by 2014.

Our roads will be heavily affected by the heavy trucks that are passing through our town which will affect the status of our roads. Contractors are on site constructing roads in Modimolle’s townships of

Leseding and Mabatlane. Mabaleng will get a ring road worth R2million during 2010.

“Deur samewerking kan ons meer bereik”

The success in our municipality lies with labour unions and the management. In order to make a turn around strategy work in our municipality, we need skilful officials, money and the filling of all critical post as and when they arise. Let me use this opportunity to honour those many people in the municipality who do good work and who do not stray from the correct path.

Honourable Speaker

In our strategic workshop we came up with Vision and Mission which will speak to our roles and respon- sebilities which we can be proud of.

VISION:“The gateway to Limpopo and the eco-tourism destination of choice”

MISSION:“To provide equitable first class services through efficient administration

and good governance and promote a safe and healthy environment”

With the Turnaround Strategy we will ensure that we meet the basic service needs of our communities. We will improve performance and professionalism in municipalities and will strengthen partnership between the municipality, communities and civil society. We have started advertising critical posts and filling all vacancies in giving effect to the Local Government Bargaining Council resolution.

Fellow Councillors

The EPWP (Expanded Public Works Programme) is the government programme that creates jobs and alleviates poverty in our community. Some of the community members are the beneficiaries of the projects and skills transfers.

Honourable Speaker

In our next financial year 2010/2011 budget, we will unfold huge projects:

In Public Works...

• We are faced with massive trucks on Nelson Mandela Drive. We want to divert the heavy trucks through a by-pass road. We put aside R100 000, 00 for the feasibility study in this regard.

• Resealing of Thabo Mbeki R1 000 000 (One million rand)and part of Nelson Mandela Drive

• Upgrade of Joe Slovo bridgeR5 150 000 (Five million One Hundred and Fifty Thousand Rand)

• Mabaleng (Alma) paving of ringroad-R2 700 000 (Two million Seven Hundred Thousand Rand)

Water

Water is a serious challenge in our municipality. We request our community to conserve water. Colleagues will remember that there was an Audit query regarding high loss of water.

For the next financial year we have put aside R1,19million (One million One Hundred Ninety Thousand Rand) for telemetry system.

Sewerage

An amount of R3 631 000 (Three million six hundred and thirty one thousand rand budgeted for Mabatlane (Vaalwater) sewer reticulation network)

Modimolle Waste Water Treatment Works Phase 1- R3 353 000

Electricity

We have witnessed the tariffs hike of ESKOM which will affect the community that we are serving negatively. You will remember when we presented the budget of 2009/2010 we proposed 37% (percent) of which 34% percent was the advice we receive from National Electricity Regulation of South Africa (NERSA) and 3% (percent) was from the maintenance and renewal of electricity infrastructure. NERSA (National Electricity Regulator of South Africa approved at a lower increase of 31,3% (percent) which will result in the municipality to adjust the tariffs to 34,3% percent.

We paid ESKOM an amount of R9,3 million for this financial year 2009/2010. The next two financial years we budgeted for the following :

2010/2011-R8,8 million

2011/2012-R6 million

Indigent Tariffs

Indigent consumers receive 75kwh of electricity, 6kl water, free refuse removal, sewerage and property rates. Indigents are not billed for services except where they exceed the free basic services provided by Council.

Honourable Speaker

Working together we can do more.

Our revenue collections for the past months has been stable at an average of 80% . The Revenue

Enhancement Strategy will be able to lift the municipality to achieve 100% (percent).

• The annual operating expenditure by the Council of ModimolleMunicipality is an amount of R169 140 000.

• The capital budget by council is approved to R40 539 078.

Operating Revenue

The operating revenue amount to R169278 000, this is a 24% increase from 2009/2010.

To accelerate service delivery the increase in revenue will be due to the following tariff increase taking effect on 1 July 2010:

Electricity-22%

Water-23%

Refuse Removal-6%

Sanitation-6%

Property Rates-6%

Sundry Services-12%

Mphiri or tee ga olle

Honourable Speaker

Today is Africa Day Celebration which provides an annual opportunity to reflect on the challenges and achievements of the governments and peoples of Africa.

Ga e gole Africa ga e gole

Really, it is here, everyone is feeling it. When you walk in every street or town people are lifting the South Africa flags and as a municipality we are behind our squad, Bafana Bafana.

Do us proud Boys show them the tsamaya’s, makarapa’s and vuvuzela’s. This is how South Africa and Africa is.

Let’s welcome our tourist with great love and good hospitality.

Honourable Speaker

I also want to extend my gratitude to my colleagues in the Executive Committee, Council Committee on Finances and Council for the support they have shown during IDP / Budget road shows and the preparation of this budget.

Serokolo se sennyane se ikoketsa ka monkgo.

Allow me to thank the administration Head Mr. Khupa Lekala, hismanagement team and staff for their hard work and valuable inputs.

I thank you

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1. Budget resolutions

In terms of Section 17(3) (a), the annual budget of a municipality must be accompanied by draft resolutions

(i)Approving the budget of the municipality;

(ii)Imposing any municipal tax and setting any municipal tariffs as may be required for the budget year; and

(iii)Approving any other matter that may be prescribed.

2.1 Approval of income and expenditure

In compliance with Section 17(3)(a)(i):

(i)the annual operating revenueby source for Modimolle Local Municipality is approved as per Table A4 on page 18 and amounts to R169278 000;

(ii)the annual operating expenditure by municipal type for Modimolle Local Municipality is approved as per Table A4 on page 18 and amounts toR169140 000;

(iii)the capital expenditure by municipal vote for Modimolle Local Municipality is approved as per Table A5 on page19 andamounts toR40 539 078;and

(iv)the capital funding by source for Modimolle Local Municipality is approved as per Table A1on page 15 and amounts to R40 539 078.

2.2Approval of tariffs and rates

In compliance with Section 17(3)a(ii), the following tariff adjustments are imposed and approved:

2.2.1.Electricity

The electricity increases will be as per the Annexure to MFMA Circular no. 51 dated

23March2010.

• Free Basic electricity to be provided to Indigents only in terms of Council’s Indigent Policy;
• 22% increase has been provided for all users; and
• Schools, Tennis and Bowling Clubs to be levied on Municipal tariffs for electricity consumption.

Table 1:Electricity tariffs

DESCRIPTION / CURRENT / PROPOSED
RESIDENTIAL:
Modimolle/Phagameng
- Conventional
- Prepaid
Mabatlane/Mabaleng/Leseding
- Conventional
- Prepaid / R0-6806
R0-6806
R0-6806
R0-6806 / R0-8303
R0-8303
R0-8303
R0-8303
BUSINESS:
Modimolle/Phagameng
- Basic
- Unit
Mabatlane/Mabaleng
- Basic - owners
- Unit / R204-79 p.m.
R0-6926
R204-79 p.m.
R0-6926 / R249-84 p.m.
R0-8450
R249-84 p.m.
R0-8450
BULK:
Modimolle/Phagameng
- Basic
- Unit
- KVA
Mabatlane/Mabaleng
- Basic
- Unit
- KVA / R217-26 p.m.
R0-3225
R72-66
R217-26 p.m.
R0-3225
R72-66 / R265-06 p.m.
R0-3935
R88-65
R265-06 p.m.
R0-3935
R88-65
MUNICIPAL / R0-4956 / R0-6046

2.2.2.Water

• Free Basic water to be provided to Indigents only.
• The proposed tariff increase of 23% is provided for Modimolle/Phagameng and 23% for Mabatlane/Mabaleng.Schools,
• Tennis and Bowling Clubswould be levied on Municipal tariffs for water consumption.

Table 2:Water tariffs

DESCRIPTION / CURRENT / PROPOSED
RESIDENTIAL:
Modimolle/Phagameng
- 0 - 20 kl
- above 20 kl
Mabatlane/Mabaleng
- 0 – 20 kl
- above 20 kl / R6-00
R8-10
R4-50
R7-20 / R7-38
R9-96
R5-54
R8-86
BUSINESS:
Modimolle/Phagameng
Mabatlane/Mabaleng / R8-40
R7-60 / R10-33
R9-35
BULK:
Modimolle/Phagameng
Kokanje
Mabatlane/Mabaleng
- 0 - 5 kl
- 6 -10 kl
- 11 - 30 kl
- above 30 kl / R7-80
R7-00
R2-30
R3-40
R4-80
R5-61 / R9-59
R8-61
R2-83
R4-18
R5-90
R6-90
MUNICIPAL / R5-40 / R6-64

2.2.3.Refuse removal

The proposed tariff increase of 6% is made. Free refuse removal is provided to indigent households.

Table 3:Refuse removal

DESCRIPTION / CURRENT / PROPOSED
Residential:
Modimolle
Phagameng
Mabatlane/Mabaleng
Business:
Modimolle/Phagameng
Mabatlane/Mabaleng
Mini Mass:
Modimolle
Mabatlane/Mabaleng
Bulk: / R56-10
R56-10
R56-10
R168-00
R168-00
R342-40
R342-40
R1 092-50 / R59-47
R59-47
R59-47
R178-10
R178-10
R362-30
R362-30
R1158-05

2.2.4.Sanitation

The sanitation tariffs are determined on the size of the stand and per toilet connection. A tariff increase of 6% is made. Free sanitation is provided to indigent households.

Table 4: Sanitation tariffs

DESCRIPTION / CURRENT / PROPOSED
Modimolle/Phagameng
Basic
Size of stand:
0 - 600 m²
600 - 1 983 m²
1 983 - 2 975 m²
2 975 - 3 966 m²
3 966 - 4 957 m²
4 957 - 9 914 m²
above 9 914 m²
(every 992 m²)
Per toilet
Mabatlane/Mabaleng
Basic
Per toilet
Vacuum tank / R22-40
R45-00
R59-60
R74-60
R89-40
R104-30
R2-50
R37-90
As above
R22-10
R55-70 / R23-74
R47-70
R63-18
R79-08
R94-76
R110-56
R2-65
R40-17
As above
R23-43
R59-04

2.2.5.Property Rates

A 6 % increase has been provided for all users.In terms of the Property Rates policy 2009/10 adopted by Council in 2008, the municipality may levy different Rates for different categories of Property.

(i)The rate randage for the 2010/11 financial year for Modimolle Local Municipality as reflected in Table 5 is approved for the following categories of property.

Table 5:Property Rates

PROPERTY RATES
Rates are determined in terms of the Property Rates Act,2004 (Act No 6 of 2004) And Council’s Rate Policy
Residential Property
An amount of 0.47 cent in a rand per annum = 0.0047
Kokanje (areas not provided services by municipality)
An amount of 0.47 cent in a rand per annum = 0.0047
Business, Commercial & Industrial Property
An amount of 1.87 cent in a rand per annum = 0.0187
Agricultural Property
An amount of 0.12 cent in a rand = 0.0012
State owned Property
An amount of 0.12 cent in a rand = 0.0012
Public Service Infrastructure
An amount of 0.12 cent in a rand = 0.0012
Public Benefit Organisation
An amount of 0.12 cent in a rand = 0.0012
Mining Property
An amount of 1.87 cent in a rand = 0.0187
Rebates are graded as per the Property Rates Policy
Interest of 12,65% a rand per annum is chargeable on all amounts in arrears after the fixed day and defaulters are liable to legal proceedings for recovery of such arrear amounts.

2.2.6.Indigent tariffs

Indigent consumers receive 75kwh of electricity, 6kl water; free refuse removal, sewerage and property rates. Indigents are not billed for services except where they exceed the free basic services provided by Council.

2.2.7.Charges: Town Hall and Sundry Services

The rentals of Council’s Town and Community halls as well as income from sundry services contribute a small percentage to income. A 12% increase provision is made.

1. Executive summary

3.1Operating Revenue

The operating revenue amounts to R169278 000, this is a 24% increase from 2009/2010

(R136265 000).

The increase in revenue is mainly due to the following tariff increases:

3.1.1Electricity 22%

3.1.2Water23%

3.1.3Refuse Removal 6%

3.1.4Sanitation 6%

3.1.5Property Rates 6%

3.1.6SundryServices12%

3.2Operating Expenditure

The operating expenditure amounts to R 169140 000, this is a 16% increase from 2009/2010

(R145731 000)

The increase in operating Expenditure is mainly due to the following:

3.2.1Employee cost

3.2.2Electricity substation upgrade

3.2.3Implementing the GRAP principle of Depreciation

3.3Capital Expenditure

The capital expenditure amounts to R40 539 078 this is a 17% increase from 2009/2010.

3.4Challenges

3.4.1Lack of funding for expansions and extensions to bulk infrastructure for water, sanitation and electricity.

3.4.2The municipality has the following bulk infrastructure challenges:

• Mabaleng has nowaste water treatment works
• Mabatlane has ponds systems for sanitation which are now used far beyond 100% capacity
• Mabatlane does not have a reliable water source, storage capacity and internal reticulation.

To correct this infrastructure needs requires massive capital injection which will be above the municipalities coffers.

3.4.3Cascading of the PMS system to all employees remains a challenge.

3.4.4The implementation of the benchmarking and wage curve will put additional weight on the budget.

3.4.5The turn-around strategy and municipalities own service delivery strategy impose the development of an institutional plan which have a direct bearing on the increase of staff and the related expenditure.

3.4.6Capacity building of councillors and officials remains a challenge.

3.4.7The advent of Local Government Elections in 2011 poses a challenge that more and more communities will demand services now.

1. Annual Budget Tables

The information in the following TablesA1 to A10 constitutes the budget of the municipality for the 2010/11 financial year and indicative allocations for the 2011/12 and 2012/13 financial years. Modimolle has prepared its Budget Document and Tables in line with the National Treasury’sMunicipal Budget and Reporting Regulations contained in Government Gazette 32141 dated 17 April 2009. The municipality converted to GRAP for the 2007/2008financial year. As a result some of the information of 2006/2007 audited outcome is not available to be included in the budget tables.

The municipality does not have any entities through which it provides municipal services. Instead, services are provided internally through departments. The key departments are Technical and Social Services. In instances where internal capability is limited, services are provided through external services providers. In such instances, Service Level Agreements are entered into with the service providers. Therefore, the budget tables that follow related to the budget of the municipality alone.

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TableA1 – Budget Summary