Johannesburg finally passes its budget – more than a week into new financial year

“The City under the Government of Local Unity has gone to great lengths to develop a balanced budget that is both responsive to the needs of the people of Johannesburg and the tough economic times we face today,” Johannesburg MMC for Finance Jolidee Matongo said on Thursday 9 July, after announcing that the 2020/2021 budget amounts to R68.1-billion. 

In a speech delivered virtually, Matongo said the budget prioritised tariff relief and rebates for pensioners amidst the impact of Covid-19 on Johannesburg residents. He noted the ripple effect that the pandemic has had on the economy, which is why the city also considered basic service delivery, housing, water, electricity, and road infrastructure development when looking at the budget. 

“It is clear that the Covid-19 pandemic has turned the global economy upside down, and the City of Johannesburg has not been an exception,” Matongo said.

The good news for Johannesburg residents was that the City has taken a decision to withdraw the proposed prepaid electricity fixed charges of R200 for residential users and R400 for commercial users.

“As the economic hub of the country, our tall order has been to urgently explore ways in which we can offer relief to the people of Johannesburg,” Matongo said. 

“The tariffs contained in the budget demonstrate our commitment to inclusivity and accountability to the residents of Johannesburg.” 

The property rates tariff will also be reduced from the proposed 4.9% to 4%, the water tariff will drop from the initial proposal of 8.6% to 6.6%, and the electricity tariff goes down from 8.10% to 6.23%. Meanwhile, the business rates ratio will be reduced from 1:2.6 to 1:2.5.

Matongo also announced that relief offered to pensioners had been extended.

“A pensioner with a property value of below R2.5-million and an income of below R10,338 for the lower limit or below R17,719 for the upper limit, will receive a 100% rebate on their rates,” Matongo said. 

Although the budget was met with support by majority parties in the house, the Economic Freedom Fighters (EFF) said it rejected the budget. 

“The blanket approval of this budget will lead to financial suicide," said EFF councillor Motshabi Ledwaba. 

And they were not the only ones to think so. 

Former Joburg mayor Herman Mashaba released a statement a day before the budget was passed (Wednesday 8 July) expressing his displeasure of the circulated version of the budget. He accused the ANC and DA of forming a “Coalition of Mediocrity” that puts political interests ahead of the residents of Johannesburg. 

“Passing this budget ensures the collapse of service delivery infrastructure in Johannesburg,” Mashaba said. 

“Moreover, it keeps an ANC in office that is severely implicated in State Capture, corruption and other forms of wrongdoing – ensuring the continued abuse of public funds. It also speaks to the DA’s commitment to end the coalition arrangements by working with the ANC.” 

Johannesburg Mayor Geoff Makhubo responded on Twitter to the claims made by his predecessor, saying: 

“It is a budget that is carefully crafted to ensure we respond to the immediate needs of the poor and vulnerable as well as to continue to provide reliable and efficient services to ratepayers and residents of Johannesburg.”

The budget was passed on Thursday after the original sitting to table it was postponed on 30 June. Council was due to sit on 2 July but this was also cancelled without explanation. This forced the Gauteng Executive Council (Exco) to intervene and issue directives  for the city to adhere to.

These stated that because the COJ has failed twice to adopt a budget, council must “convene urgently to approve its budget for the 2020/2021 municipal financial year, by no later than 10 July 2020”, placing the city on a tight deadline.

The deadline was met and the budget passed; however, it should come as no surprise that, even with a severe amount of pressure looming over the metro, some council members still had issues surrounding the budget, and the most pressing issue was that of salary increases for municipal staff and city councillors. 

The DA and the EFF argued against salary increases, saying that a remuneration increase during a pandemic was “absurd” and should not even be an option. 

The “sensitive matter” around remuneration increases was one that has been hanging heavy over councillors’ heads. 

It was the Organisation Undoing Tax Abuse (Outa) that raised concerns around an increase in remuneration, urging that councillors should get a 0% increase. 

“The money wasted on salary increases over the last decade could have addressed the backlog in maintenance and repairs on infrastructure,”  Julius Kleynhans, Outa’s strategy and development executive, said in a statement on 7 July. 

These concerns fell on deaf ears, however, as “the City is budgeting for a salary increase of 6.25% for 2020/21 and 6.25% for both 2021/22 and 2022/23 financial years”. DM