With just two months to go before the 2018/2019 financial year ends, the Nelson Mandela Bay municipality has spent only 33.4% of its capital budget.
The unspent conditional grants amount to R1.2bn – money that would have to be either spent or committed before June 30.
Should the city fail to spend or commit the money, it would have to apply for a roll-over of funds from the National Treasury.
The Treasury has, however, said no roll-over applications would be approved if the city did not have a permanent chief financial officer on its payroll.
A report that was meant to be discussed at a budget and treasury portfolio committee on Tuesday paints a bleak picture of the city’s financial position.
The unspent conditional grants include:
● A R233.4m disaster relief grant;
● A R200m additional urban settlement development grant; and
● R7.1m for municipal emergency housing.
The meeting was postponed as neither acting city manager Peter Neilson nor acting CFO Jackson Ngcelwane could attend.
The pair, along with budget and treasury portfolio head Mkhuseli Mtsila and deputy mayor Thsonono Buyeye, on Monday presented the city’s 2019/2020 budget and Integrated Development Plan to the National Treasury.
On Tuesday, Mtsila said the meeting with the Treasury was successful, with the Treasury commending the city on its cash-backed budget.
“What is important is that the budget is funded and it meets the requirements.
“Concerns were raised about the city always adopting a deficit budget – we were told to plan ahead.”
On the poor capital expenditure rate, Mtsila said the establishment of a budget performance monitoring committee would ensure that the money was spent.
“That committee will make sure that the money is rechannelled.
“If departments are not using the money, we will divert it to where we think it could be used as quickly as possible before the end of the financial year,” he said.
Mtsila said the committee would sit on May 13. The city had adjusted its revenue collection targets from 95% to 94% for the next financial year.
He said the council was in agreement with a memorandum from the Treasury in 2018 [when the DA was at the helm] stating that the collection target of 95% was not realistic.
“We have changed our collection target,” Mtsila said.
DA councillor Retief Odendaal said capital underspending was a cause for concern. “This is very serious. “We now have significant underspending, we have no idea where the process of appointing a permanent CFO is, and we know that the National Treasury is very good [at] making good on its threats.
“It’s a nerve-wracking situation,” he said.