SPECIAL MAYORAL COMMITTEE MEETING - Date: 18 AUGUST 2021 Time: 9h00 - Bitou Municipality
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Bitou Local Municipality
Bitou Plaaslike Munisipaliteit
Umasipala WeBitou
SPECIAL MAYORAL
COMMITTEE
MEETING
Venue: Council Chambers, Municipal Offices,
Sewell Street, Plettenberg Bay
Date: 18 AUGUST 2021
Time: 9h00BITOU LOCAL MUNICIPALITY
16 August 2021
Members of the Mayoral Committee
Acting Municipal Manager and Directors
SPECIAL MAYORAL COMMITTEE MEETING: WEDNESDAY, 18 AUGUST
2021 AT 09h00
NOTICE is hereby given that a Special Mayoral Committee Meeting will be held in the
Council Chamber, Municipal Offices, Sewell Street, Plettenberg Bay on
WEDNESDAY, 18 AUGUST 2021 AT 09h00, to consider the business set forth in the
Agenda.
Yours faithfully
pp.
S E GCABAYI
Executive Mayor (Acting)
Constitution of the Mayoral Committee:
The Acting Executive Mayor, Councillor S E Gcabayi
Member of the Mayoral Committee, Councillor MM Mbali
Member of the Mayoral Committee, Councillor L M SeyisiBitou Local Municipality
Special Mayoral Committee Agenda
18 August 2021
Order of Business
1. OPENING
2. ATTENDANCE
The Attendance registers will be circulated at the meeting.
3. APPLICATION FOR LEAVE OF ABSENCE
Application for leave of absence, if necessary, will be considered.
4. CONFIRMATION OF MINUTES
No Minutes for consideration
5. COMMUNICATION BY THE ACTING EXECUTIVE MAYOR
6. PRESENTATION
None
7. CONSIDERATION OF REPORTS (OPEN)
Section 1: Office of the Municipal Manager
No Items for consideration
Section 2: Directorate Financial Services
Schedule of Items attachedOrder of Business: Special Mayoral Committee Meeting: 18 August 2021
Section 3: Directorate Corporate Services
No Items for consideration
Section 4: Directorate Community Services
No Items for consideration
Section 5: Directorate Engineering Services
No Items for consideration
Section 6: Directorate Economic Development and Planning
Schedule of Item attached
8. IN – COMMITTEE ITEMS
No In-Committee Items for consideration
9. CLOSURE7. CONSIDERATION OF REPORTS
PORTFOLIO INDEX
CONSIDERATION OF REPORTS
SPECIAL MAYORAL COMMITTEE MEETING (OPEN)
18 AUGUST 2021
SECTION 1: OFFICE OF THE MUNICIPAL MANAGER
ITEM NO SUBJECT FILE REF PAGE NO
No Items for consideration
SECTION 2: FINANCE
ITEM NO SUBJECT FILE REF PAGE NO
PROVINCIAL TREASURY REVIEW AND FEEDBACK: FINAL
M/2/248/08/21
BUDGETS - 2021/22
9/1/3/4 8-17
SPECIAL ADJUSTMENT BUDGET FOR 2021/22 IN TERMS OF
C/2/249/08/21 SECTION 28(C) OF THE MUNICIPAL FINANCE MANAGEMENT 5/15/6 18-21
ACT 56 OF 2003 (MFMA)
SECTION 3: CORPORATE SERVICES
ITEM NO SUBJECT FILE REF PAGE NO
No Items for consideration
SECTION 4: COMMUNITY SERVICES
ITEM NO SUBJECT FILE REF PAGE NO
No Items for consideration
SECTION 5: ENGINEERING SERVICES
ITEM NO SUBJECT FILE REF PAGE NO
No Items for consideration
SECTION 6: ECONOMIC DEVELOPMENT & PLANNING
ITEM NO SUBJECT FILE REF PAGE NO
C/6/141/08/21 AIRPORT: STATUS QUO AND WAY FORWARD 17/12/2 23-24SECTION 2 FINANCE
Section 2: Finance
ITEM M/2/248/08/21
PROVINCIAL TREASURY REVIEW AND FEEDBACK: FINAL BUDGETS -
2021/22
Directorate: Finance Demarcation: All Wards
File Ref: 9/1/3/4 Delegation: MayCo
Attachment: Annexure “A” – Provincial Treasury Review and Feedback:
Final Budgets - 2021/22
Report from: CFO- Budget Office
Date: 16 August 2021
PURPOSE OF THE REPORT
The purpose of the report is to present the review and feedback performed by Provincial
Treasury on 2021/22 Annual budget for noting.
BACKGROUND/DISCUSSION
In the council that was held on the 08 June 2021, the budget was presented and approved
by the council. The final budget that was approved was inclusive of the Provincial and
National Treasury inputs as mandated by MFMA, to provide submission and these
submission must be considered by the municipality.
MFMA Section 24 (3) states that, the accounting officer of a municipality must submit
the approved annual budget to the National Treasury (NT) and the relevant provincial
treasury (PT). The budget was submitted to both NT and PT.
The review of the final budgets of municipalities are mainly conducted to ensure the
comments of the WCG have been taken into account, and was tabled in council by the
mayor as required by the MFMA. The review focuses on key main areas and the
feedback on the final budget is provided under each of main areas.
In a letter to the Minister of Local Government and Environmental Affairs, Mr Anton
Bredell, dated 27 July 2021, the Executive Mayor confirmed that the 2021/22 budget and
IDP was approved at a council meeting on 8 June 2021. The documents that served
before council that day was submitted to Provincial Treasury on 22 June 2021 and will
form the basis of this assessment.
Provincial Treasury’s assessment on the 2021/22 final budget was received. The
approved 2020/21 MTREF budget is funded in accordance with section 18 of the MFMA,
from realistically anticipated revenues to be collected; cash-backed accumulated funds
from previous years’ surpluses not committed for other purposes; borrowed long term
funds, for the capital budget; and short-term funds for operational budget.
8Section 2: Finance
LEGAL REQUIREMENTS
MFMA section 62
FINANCIAL IMPLICATIONS
N/A
RECOMMENDED BY MUNICIPAL MANAGER
That that Mayoral Committee take note of the report.
9Annexure "A"
Mr K Roman
Local Government Budget Office
E-mail: Keith.Roman@westerncape.gov.za
Tel: +27 021 483-5434
Private Bag X9165
Reference number: PTR 13/5/2/25
CAPE TOWN
8000
The Municipal Manager
Bitou Municipality
Private Bag X1002
PLETTENBERG BAY
6600
For attention: Adv. L Ngoqo
PROVINCIAL TREASURY REVIEW AND FEEDBACK: FINAL BUDGETS - 2021/22
1. INTRODUCTION
a) Section 5(3) of the Municipal Finance Management Act (Act 56 of 2003) (MFMA) requires
Provincial Treasury (PT) to fulfil its monitoring role over the financial affairs of municipalities and to
promote the objectives as encapsulated in section 5(2) of the Act. In this regard a provincial
treasury must monitor the preparation by municipalities in the province of their budgets.
b) When preparing the annual budget, the mayor of a municipality must consult the relevant
provincial treasury, and when requested, the National Treasury (NT) and any national or
provincial organs of state, as may be prescribed.
c) During April/May of this year, the Western Cape Government (WCG) conducted the Strategic
Integrated Municipal Engagements (SIME/LGMTEC) engagements with the municipalities in the
Province during which our comments on the tabled 2021/22 MTEF budget and associated
documents were presented to yourself and the management team of the Municipality.
d) The municipal council is obliged to consider any views of the local community; National Treasury,
the relevant provincial treasury and any provincial or national organs of state or municipalities
which made submissions on the budget.
e) The feedback on the final budget of the Municipality is intended to facilitate and close the
SIME process.
www.westerncape.gov.za 1
Provincial Treasury | Local Government Budget Office 102. STRUCTURE OF THE REVIEW AND FEEDBACK
The review of the final budgets of municipalities are mainly conducted to ensure the comments of
the WCG have been taken into account, and was tabled in council by the mayor as required by
the MFMA. The review focuses on key main areas and the feedback on the final budget is provided
under each of these main areas.
In a letter to the Minister of Local Government and Environmental Affairs, Mr Anton Bredell, dated
27 July 2021, the Executive Mayor confirmed that the 2021/22 budget and IDP was approved at a
council meeting on 8 June 2021. The documents that served before council that day was submitted
to Provincial Treasury on 22 June 2021 and will form the basis of this assessment.
2.1 Conformance
The conformance assessment highlights compliance by the Bitou Municipality with the MFMA and
Municipal Budgeting and Reporting Regulations (MBRR) as follows:
Compliance Yes/No
The final budget was considered for approval by Council at least 30 days before the start Yes
of the budget year and subsequently approved before the start of the budget year in
accordance with sections 16 and 24 of the MFMA. The Municipality approved the final
budget on 8 June 2021.
All the relevant A-Schedules and supporting schedules were fully completed. Yes
The approved budget and supporting documents were placed on the municipal website Yes
in accordance with section 75 of the MFMA.
The Municipality adopted all of its policies in council. Yes
The Municipality submitted its budget schedule in the required mSCOA format version 6.5. Yes
a) The data strings submission status for the Municipality as at 31 May 2021 is as follows:
Financial Year 2019 2020 2021
Financial Data RAUD PAUD AUDA ORGB PROR ADJB PRAD M01 M02 M03 M04 M05 M06 M07 M08 M09 M10 M11
Bitou G G G G Y G Y G G G G G G G G G G G
BMQ1 BMQ2 BMQ3 IMQ1 IMQ2 IMQ3 CR01 CR02 CR03 CR04 CR05 CR06 CR07 CR08 CR09 CR10 CR10
Non-Financial Data
G G G G G G G G G G G
DB01 DB02 DB03 DB04 DB05 DB06 DB07 DB08 DB09 DB10 DB10
Bitou G G G G G O
G G G G G G G G G G G
Source: NT LG Database May 2021
The mSCOA data string compliance indicates that the Municipality submitted all the financial and
non-financial data strings for the period to-date. The Municipality however submitted the 2021 PROR
and PRAD with Stage 2 errors, as well as 2021 IMQ3 submitted with Stage 1 errors.
2.2 Economic Sustainability
2.2.1 Responsiveness
a) A comparison of the strategic allocations in the tabled and approved operational budget, as
per support schedule SA5, indicates that the priorities remain largely unchanged. Some minor
increases and reductions in the allocations to the strategic objectives were noted, despite an
overall reduction to the operational budget.
SIME FINAL BUDGET ASSESSMENT 2021/22: BITOU MUNICIPALITY 2
11The biggest priority in the operating budget is basic services as underlined by the strategic
objective “Universal access to decent quality of services” and constitutes 54.6 per cent of the
total operational expenditure, which were allocated an additional R19.623 million with the
approved budget. The second highest priority “Eradicate poverty and uplift previously
disadvantage communities, promote social cohesion” was conversely reduced by
R25.796 million whereas the third highest priority, “Build a capable corruption-fee administration
that is able to deliver on the developmental mandate” was allocated an additional
R4.518 million.
The Municipality did not complete support schedule SA6 (strategic capital budget allocations)
in the tabled budget. The schedule was however completed in the approved budget. The
completed support schedule SA6 reflects the same priorities as in the operational budget with
“Universal access to decent quality of services” constituting 86.5 per cent of the capital budget.
The other two strategic objectives, “Eradicate poverty and uplift previously disadvantaged
communities, promote social cohesion” and “Build a capable, corruption-free administration
that is able to deliver on developmental mandate” represent 8.1 per cent and 5.2 per cent
respectively of the capital expenditure. The changes between the tabled and final operating
and capital budgets enhances the responsiveness and allocative efficiency of the budget by
addressing quality of life, employment, economic growth and environmental and planning
issues. I
b) It is noted that budget schedule SA9, which is used for social, economic and demographic
statistics and assumptions, as well as budget schedule A10 which outlines basic service
estimations, has not been completed in the adopted budget. These serve as an important point
of reference which links the budget to the strategic plan represented by the Integrated
Development Plan.
c) Provincial Treasury received the Service Delivery and Budget Implementation plan (SDBIP) on
16 July 2021 after it has been approved by the Mayor on 6 July 2021. Provincial Treasury will assess
the approved SDBIP and will provide feedback to the Municipality shortly.
2.3 Financial Sustainability
2.3.1 Revenue and Expenditure Management
Table 1 Summary of the 2021/22 Approved Budget
TABLED 2021/22 Medium Term Revenue ADOPTED 2021/22 Medium Term
Description 2017/18 2018/19 2019/20 Current Year 2020/21
& Expenditure Framework Revenue & Expenditure Framework
Audited Audited Audited Original Adjusted Budget Year Budget Year Budget Year Budget Year Budget Year Budget Year
R thousands
Outcome Outcome Outcome Budget Budget 2021/22 +1 2022/23 +2 2023/24 2021/22 +1 2022/23 +2 2023/24
Total Operating Revenue 616 145 714 103 663 945 757 406 755 076 789 057 877 392 955 717 785 441 870 265 947 522
Total Operating Expenditure 608 710 800 577 649 042 755 626 753 603 782 560 851 402 928 447 720 763 785 665 858 788
Surplus/(Deficit) 7 435 (86 475) 14 903 1 780 1 473 6 497 25 990 27 270 64 679 84 600 88 734
Surplus/(Deficit) after capital transfers 62 842 25 526 41 140 32 381 35 019 54 388 73 984 40 605 112 569 132 593 123 081
Surplus/(Deficit) for the year 62 842 25 526 41 140 32 381 35 019 54 388 73 984 40 605 112 569 132 593 123 081
Capital expenditure & funds sources
Capital expenditure 117 360 83 321 51 982 73 578 84 763 83 509 79 770 42 751 90 316 80 022 43 291
Transfers recognised - capital 30 179 51 125 22 575 27 432 28 781 44 317 38 773 25 461 44 817 38 773 25 461
Borrow ing 8 508 – – – 11 805 – – – – – –
Internally generated funds 23 113 41 616 29 406 46 146 44 177 39 192 40 997 17 290 45 499 41 249 17 830
Total sources of capital funds 61 800 92 741 51 982 73 578 84 763 83 509 79 770 42 751 90 316 80 022 43 291
Cash/cash equivalents at the year end 967 177 701 96 375 31 553 40 276 19 462 27 263 68 121 163 017 213 167 261 220
Cash back reconciliation(surplus/deficit) (227 271) (289 988) (414 879) (261 662) (243 467) (313 022) (323 480) (371 488) (297 409) (303 672) (318 812)
Source: Bitou Municipality: A1- Data strings - 2021/22 MTREF Adopted Budget
SIME FINAL BUDGET ASSESSMENT 2021/22: BITOU MUNICIPALITY 3
12a) The approved 2020/21 MTREF budget is funded in accordance with section 18 of the MFMA, from
realistically anticipated revenues to be collected; cash-backed accumulated funds from
previous years’ surpluses not committed for other purposes; borrowed long term funds, for the
capital budget; and short-term funds for operational budget.
b) The budget provides for R785.44 million operating revenue, R720.76 million operating
expenditures whilst the capital budget of R90.32 million will be funded from internally generated
funds amounting to R45.50 million and R44.82 million from grants.
c) The Municipality is commended for adopting an operating surplus budget over the
2021/22 MTREF period. The operating surplus in the final 2021/22 MTREF budget increased
substantially by R58.18 million in 2021/22 from the tabled budget in March 2021. For the outer
years the Municipality adopted operating surplus budgets of R84.60 million and R88.73 million for
2022/23 and 2023/24 respectively.
d) While the revenue sources remain under strain, the Municipality revised most of the tariff
increases for services to be within the headline CPI of 3 to 6 per cent as well as according to the
recommended guide per MFMA Circular No. 108. The following changes were noted in the
adopted 2021/22 MTREF budget when compared to the tabled budget:
The proposed electricity tariff remained unchanged and is aligned with the NERSA tariff
guideline of 14.6 per cent.
Property rates tariffs remains the same at 4.1 per cent in the adopted budget.
Water and Sewerage charges remains at 4.1 per cent in the adopted budget.
Refuse services tariff increase remained unchanged at 4.1 per cent as per the tabled.
Employee related cost changed to 4.5 per cent in the adopted budget from the 6.4 per cent
in the tabled budget.
e) Marginal amendments are noted from the draft to the final budget revenue budget of
R3.62 million, mainly due to a decrease projected in electricity services chargers of R6.10 million.
f) Concern is raised as the Municipality projects a collection rate of 85 per cent over the
2021/22 MTREF budget which is below the NT norm of 95 per cent and will have a negative
impact on the municipalities cashflow. Taking into consideration that the National and Provincial
grants will decrease over the MTREF, Bitou Municipality should ensure that it collects the projected
85 per cent from the municipal services and other revenue streams as well as strive towards
meeting the National Treasury norm collection rate of 95 per cent in the future.
g) A significant decline in operating expenditure is projected for the 2021/22 financial year from the
tabled budget mainly due to major decrease of R55 million for debt impairment. The Municipality
is commended for taking the LGMTEC comments into account however these projections are
still not considered to be realistic, as it does not align with past audit outcomes and not
accounting for the low collection rates anticipated by the Municipality which is further
exacerbated by the economic effects ensuing the COVID-19 pandemic. The Municipality should
monitor collection rates during the year and make the necessary adjustments during the
mid-year.
SIME FINAL BUDGET ASSESSMENT 2021/22: BITOU MUNICIPALITY 4
13h) Employee related costs projections for the 2021/22 financial year are based on 4.51 per cent
salary increase, which is the 3 per cent as proposed by SALGA and 1.5 per cent increase for
medical aid. It is projected to decrease by R8.57 million or 3 per cent from the March 2021 tabled
budget however still comprises 38.2 per cent of the adopted 2021 budget. Thus, the Municipality
is reminded to ensure that compensation demands are balanced with the broader needs of the
community and curb against runaway expenditure as the wage bill is bordering on the upper
limit of the 25 - 40 per cent National norm. The Municipality continues to be encouraged to
monitor employee related costs closely to ensure the expenditure item is within the affordable
limits as increases should correspond with adequate revenue provisions as to not adversely
impact the financial health of the Municipality.
i) The adopted capital budget increased to R90.32 million from R83.51 million per the March 2021
tabled budget. The revision was mainly due to capital projects relating to Trading Services
increasing by R4.94 million, community and public safety increasing by R1.60 million and an
increase of R6.31 million for internally generated funds. Furthermore, the Municipality is
commended for aligning the data strings for capital expenditure to capital funding sources.
j) The Municipality has projected not to take up any new borrowings over the 2021/22 MTREF and
is reliant on own funding to the proportion of 50.4 per cent and grants of 49.6 per cent to fund
the capital program.
k) The National and Provincial fiscus remains under pressure given the COVID-19 third wave the
country entered in June 2021. Effective implementation of the budget and continuous
implementation of the cost containment regulation is required to manage vulnerability to any
further fluctuations in the economy. The maximum benefit of grants must further be derived by
implementing these funds within the required timeframes.
2.3.2 Cash and Liabilities Management
After assessing the cash and liabilities of the final annual budget, Provincial Treasury would hereby
wish to draw the Municipality’s attention to the following:
a) The current ratios of 1.65:1 (2021/22), 1.35:1 (2022/23) and 1.75:1 (2023/24) indicates that the
liquidity of the Municipality increases over the MTREF period. The ratio is above the NT acceptable
norm of 1.5 to 2:1.
b) The liquidity ratios of 0.86:1 (2021/22), 0.72:1(2022/23) and 1.02:1 (2023/24) are below the
NT acceptable norm of 1:1, indicating that the Municipality may not have adequate cash/cash
equivalents to settle its short-term debts over the MTREF period.
c) The current and liquidity ratios outcomes are based on the data string’s budget tables, as
submitted to NT (NT LG Database).
d) The Municipality does not intend to take up borrowings over the MTREF. The Municipality still has
the capacity to increase funding from borrowings, however, this should be considered within the
cash flow requirements. The anticipated debt ratio (total borrowings to total operating revenue)
is within the NT norm of below 45 per cent.
e) The Municipality reported positive closing cash/cash equivalents balances and anticipate
decreases over the MTREF.
SIME FINAL BUDGET ASSESSMENT 2021/22: BITOU MUNICIPALITY 5
14f) With the COVID-19 pandemic, it is recommended that Municipality adopts an active cash
management approach in order to maintain sound liquidity for sustainable service delivery.
2.4 Budget Verification
National Treasury annually publishes all approved municipal budgets on its website. Before publishing
the budgets, NT verifies the correctness of the information submitted by municipalities by comparing
the following sources of information, namely:
a) Hard and electronic copies of the approved A-Schedules and B-Schedules.
b) Database generated A and B-Schedules based on submitted ORGB, PROR, ADJB and
PRAD data strings respectively.
c) The Municipality is also reminded of MFMA Circular No. 93 which indicates that from 2019/20
financial year onwards, municipalities will no longer be required to continue with the use of the
Budget Reform Returns to upload budget and monthly expenditure to the NT Local Government
Database for publication purposes. National Treasury will use only the mSCOA data strings
required for submission as prescribed and all publications will use the data collected from the
mSCOA data strings. This places the responsibility on the Municipality to ensure that budgets are
accurately locked into the financial system; each transaction is accurately recorded on a daily
base; data collected from sub-systems is accurately represented in the General Ledger (GL); at
the end of the reporting period, all reconciliations are done, sub-systems are in balance and the
Municipal Manager and CFO agrees with the figures as presented in the Schedule C and other
management reports or dashboards; the reporting period is CLOSED for further transactions; and
he data string for the period is produced directly out of the financial system and uploaded using
the LG Upload Portal.
Also, the verification process before each quarterly Section 71 publication will fall away as the
responsibility now lies with the Municipality BEFORE submitting the data strings to ensure that the data
is an accurate reflection of the state of municipal finances.
Upon performing the ORGB analysis, it was noted that the Municipality made progress with the
overall implementation of the mSCOA reform. The following was however noted:
The Municipality complied with COVID-19 Reporting in terms of mSCOA Circular No. 9. However,
the Municipality only budget for one-line item for covid-19 expenditure (Contracted Services:
Pest Control and Fumigation).
The Municipality has not fully implemented balance sheet budgeting & movement accounting
in accordance with mSCOA Circular No. 10&11.
With the above in mind, the Municipality is encouraged to consider the guidance provided by NT
and address misalignments accordingly in their respective adjustment budgets to ensure that the
budget is perfectly aligned.
SIME FINAL BUDGET ASSESSMENT 2021/22: BITOU MUNICIPALITY 6
153. CONCLUSION
The Municipality adhered to the timeframes provided in the MFMA and the MBRR with regard to the
approval of the budget, which was also timeously placed on the municipal website and submitted
to PT. The Municipality is commended for the full completion of its main and supporting schedules.
The final budget is not a significantly different version of the tabled budget and hence our comments
provided during the SIME engagement with the Municipality remains the main point of reference.
MR ML BOOYSEN
pp HEAD OFFICIAL: PROVINCIAL TREASURY
DATE: 6 August 2021
Cc: Chief Financial Officer, Bitou Municipality
SIME FINAL BUDGET ASSESSMENT 2021/22: BITOU MUNICIPALITY 7
16Section 2: Finance
ITEM C/2/249/08/21
SPECIAL ADJUSTMENT BUDGET FOR 2021/22 IN TERMS OF SECTION 28(C)
OF THE MUNICIPAL FINANCE MANAGEMENT ACT 56 OF 2003 (MFMA)
Directorate: Finance Demarcation: All wards
Delegation: Council
File Ref: 5/15/6
Attachments: None
Report from: Chief Financial Officer
Date: 16 August 2021
PURPOSE OF THE REPORT
To request a special adjustment in terms of MFMA section 28 (c) to fund the fire disaster at that
broke at Qolweni and Kurland.
MFMA section 28 stipulates that;
(1) A municipality may revise an approved annual budget through an adjustment budget.
(2) (c ) An Adjustment budget may, within a prescribed framework, authorize unforeseen and
unavoidable expenditure recommended by the mayor of the municipality.
BACKGROUND/DISCUSSION
Bitou Municipal Council has approved an annual budget for the 2021/22 financial year on 8 June
2021 in terms of , Section 17 of the MFMA. A total budget of R866,079 million was approved
by the municipal council.
Employee related cost budget is amounting to R274,973 million for the 2021/22 financial year.
The amount includes the estimated annual salary adjustment 4.5% increase for employees and
notch progression for qualifying employees. The increase is still subject to SALGA Bargaining
council, hence is not yet implemented by Council as it was due from the 1st July 2021. Also
included in the budgeted amount is R16.9 million to fund critical vacant positions to enhance
service delivery. The employee related cost budget includes EPWP which takes the employee
cost to 35%.
The purpose of this report is to request council to utilize funds that was earmarked for critical
vacant to fund unforeseenable and unavoidable expenditure that has occurred in Qolweni and
Kurland as a results of fires.
17Section 2: Finance
Qolweni and Kurland has been affected by fires and more families were left destitute. The amount
is needed for restoration of electricity and emergency housing.
1. Qolweni Fire 2 – R 564 480 for electrification restoration
2. Kurland Fire – R 253 230 for electrification restoration
3. Qolweni Electrification – R 2 584 700 for electrification of new houses to be built by the
Department of Human Settlement
4. Kurland Electrification – R 1 450 000 for TRA
5. Ablution facilities- R 1 690 246.54
6. Temporary Structure - R 2 753 235.40
7. Integrated Sustainable Human Settlements Plan - R 1 063 000.00
8. Informal Settlement Upgrading Plans – R 2 493 518.06
A grant allocation for 2021/22 financial year amounting R11.2 million to fund 169 Qolweni
housing project will not be transferred to the municipality. The project will now be implemented
by the provincial department. Operating expenditure will be reduced also with the same amount.
The total budget budget will be decreased to an amount of R854,869 million for 2021/22
financial year.
Legal requirements
Section 28 of the MFMA - Municipal adjustments budgets
(1) A municipality may revise an approved annual budget through an adjustments budget.
(2) An adjustments budget—
(a) must adjust the revenue and expenditure estimates downwards if there is material
under-collection of revenue during the current year;
(b) may appropriate additional revenues that have become available over and above those
anticipated in the annual budget, but only to revise or accelerate spending programmes
already budgeted for;
(c) may, within a prescribed framework, authorise unforeseeable and unavoidable
expenditure recommended by the mayor of the municipality;
(d) may authorise the utilisation of projected savings in one vote towards spending under
another vote;
(e) may authorise the spending of funds that were unspent at the end of the past financial
year where the under-spending could not reasonably have been foreseen at the time to
include projected roll-overs when the annual budget for the current year was approved by
the council;
(f) may correct any errors in the annual budget; and
(g) may provide for any other expenditure within a prescribed framework.
3) An adjustment budget must be in a prescribed form.
4) Only the mayor may table an adjustments budget in the municipal council, but an adjustments
budget in terms of subsection (2) (b ) to (g ) may only be tabled within prescribed limitation as to
timing or frequency
5) When an adjustments budget is tabled, it must be accompanied by
a) an explanation how the adjustments budget affects the annual budget;
(b) motivation of any material changes to the annual budget
18Section 2: Finance
(c) an explanation of the impact of any increased spending on the annual budget and the
annual budget for the next two financial years; and
d) any other supporting documentation that may be prescribed
6) Municipal tax and tariffs may not be increased during a financial year
7) Section 22(b), 23 (3) and 24(3) apply in respect of an adjustment budget , and in such
application a reference in those sections to an annual budget must be read as a reference to an
adjustment budget.
MFMA Municipal Budget and Reporting Regulations (MBRR) states:
Section 22(1), An adjustments budget of a municipality must be appropriately funded.
Section 23(4), An adjustments budget referred to in section 28(2)(c ) of the Act may only be
tabled in the municipal council at the first available opportunity after the unforeseeable and
unavoidable expenditure contemeplated in that section was incurred and within the time period
set in section 29(3) of the Act.
Explanations on how the adjustment budget will affect the annual budget in terms of
MFMA 28 (5) (a) – (d)
Discussions were held at Executive Management Team to respond to this disaster. As much as the
response should come from the District and Provincial Human Settlement department, it was
agreed that the municipality would not wait for Human Settlement to provide funding for
emergency. The situation was so dire that management had to make a call to assist the destitute
families in this regard. The decision was then taken to freeze all new funded vacant position and
utilise the budget from Employee Related Cost to fund these projects.
This will affect the Employee Related Cost, Contracted Services and other materials budget.
There will be reduction on the operational budget due to reduction on the operational revenue and
operational expenditure. Also the movement of funds from employee related cost to consultants,
contrated services and materials budget.
Financial Implications
R11.2 million housing grant reduction on operating revenue and related expenditure
R13.8 million funded from Employee related Cost to operating budget.
COMMENTS BY CHIEF FINANCIAL OFFICER
1. That the item will be implemented upon approval by council
2. That the moratorium be circulated to freeze all vacant positions
3. That Budget allocated for vacant positions be utilised for the above request
4. Austerity measures must be implemented in terms of Council Cost Containment Policy
19Section 2: Finance
COMMENTS BY DIRECTOR COMMUNITY SERVICES
The Emergency Housing project is geared towards provision of urgent relief to disaster affected
victims throughout the Bitou Municipality. These disaster incidents occur in a form of fire and
natural causes, wherein community members loose their homes and belongings. The municipality
is then expected to provide alternative accommodation with interim services. Also, the provision
of such adequate informal shelter enhances efforts to curb the spread of covid 19 virus.
The Human Settlements planning projects are a requirement from the Provincial Department of
Human Settlements to access the grant made available to municipalities. The funding applications
for the grant are due on 16 August 2021, and therefore the draft Plans and funding applications
should be completed by 13 August 2021.
Due to the urgent need for the budget adjustment it should be noted that the Executive Mayor has
powers to approve this proposed adjustment and expedndituer to be incurred, as enshrined in
Section 29 of the MFMA, which states that “The Mayor of a municipality may in emergency or
other expectional circumstances authorize unforseable and unavoidable expenditure for which no
provision was made in an approved budget. Section 29 (c) futher states that any such expenditure
must be reported by the Mayor to the municipal Council at its next meeting.
The necessary budget preparation should be urgently implemented by creating the necessary u-
keys for the identified projects.
COMMENTS BY DIRECTOR ENGINEERING SERVICES
Supported.
COMMENTS BY DIRECTOR ECONOMIC PLANNING AND DEVELOPMENT
SERVICES
Supported if the freezing of positions is the direct result of the need to address (fire) emergencies,
and more specifically to fund matters of (mostly) a capital nature.
However, I cannot support the notion that the filling of essential positions has to be sacrificed to
fund operational activities that should have been budgeted for. If there is a need for an ‘Integrated
Human Settlement Plan’ this should have been on the budget – it cannot be regarded as an
emergency (I may be stepping into the territory of another Department, but I am in any event not
convinced that consultants were/are required to do this). Depending on what is meant by
‘Informal Settlement Upgrading Plans’ the same comment applies to this initiative as well.
RECOMMENDED BY THE MUNICIPAL MANAGER
1. That Council approves the special adjustment budget based on the following adjustments
a. R11.2 million housing grant reduction on operating revenue and related expenditure
b. R13.8 million funded from Employee related Cost to operating budget.
2. That the SDBIP be amended accordingly.
20Section 2: Finance
3. That a moratorium be placed on the filling of vacancies as a result of the re-alloaction of
funding.
4. That austerity measures must be implemented in terms of Council’s Cost Containment Policy.
21SECTION 6
ECONOMIC DEVELOPMENT AND
PLANNINGSection 6: Economic Development and Planning
ITEM C/6/141/08/21
AIRPORT: STATUS QUO AND WAY FORWARD
Directorate: Economic Development & Planning Demarcation: Ward 2
Portfolio Comm: Strategic Services Delegation: Council
File Ref: 17/12/2
Report from: Director: Economic Development & Planning
Author: Director: Economic Development & Planning
Date: 16 August 2021
PURPOSE OF THE REPORT
To inform the Council of the current status and the way forward in relation to the use and
management of the airport.
EXECUTIVE SUMMARY
The airport has been downgraded due to the failure to address certain outstanding issues that have
been raised during SACAA inspections over a number of years. One of the direct effects of this
downgrading was the immediate suspension of all flights of CemAir to and from Plettenberg Bay.
An internal meeting was held on 12 August to discuss these matters, and will be followed up by a
meeting with representatives of CemAir, VRST (the fuel supplier) and the local airport users /
hangers association on 17 August. Feedback regarding the outcome of these meetings and
suggestions on the way forward will be provided at the meeting.
BACKGROUND /DISCUSSION
A Category 2 classification allows the airport to operate as a small facility that allows use by small
private planes, and have only basic management and safety requirements. A Category 4
classification, which is required to allow commercial operations (such as CemAir) requires certain
substantial additional management and safety standards.
Inspections are carried out from time to time by the South African Civil Aviation Authority
(SACAA), during which the monitor compliance with the prescribed requirements. It appears that
the SACAA has over a number of years identified a number of issues that had to be addressed, but
that it was not done (or at least not done to their satisfaction). The direct result of this failure is
that the airport has been (or will be) downgraded from a Category 4 to a Category 2 facility.
23Section 6: Economic Development and Planning
In addition to the above, the Council has previously (during 2018/2019) adopted a resolution that
the Municipality should initiate a ‘call for proposals’ process with the aim to appoint a service
provider to manage the airport facility on behalf of the Municipality. It is not known why this
decision has not yet been implemented.
An internal meeting to discuss the matter was held on 12 August. It was agreed that a two-phased
approach will be adopted. First, attempts will be made to address the outstanding issues identified
by the SACAA (in conjunction with other stakeholders such as CemAir) as a matter of urgency
(although it needs to be mentioned that the cost implications to the Municipality was identified as
a serious concern). Second, and in parallel to this, the outstanding ‘call for proposals’ process
should be initiated without further delays.
A further meeting to discuss the abovementioned matters with CemAir, VRST (the fuel supplier)
and the local airport users / hanger owners association will be held on 17 August. A ‘feedback
report’ of the outcome of these discussions will be given at the meeting.
FINANCIAL IMPLICATION
The financial implications are an unknown at this stage, and will largely be dependent on ‘the way
forward’ model to be determined.
RELEVANT LEGISLATION
Civil Aviation Act, 2009 (Act 9 of 2009)
Municipal Systems Act, 2000 (Act 32 of 200)
Municipal Finance Management Act, 2003 (Act 56 of 2003)
Comments: Director Financial Services
The recommendation of the Acting Municipal Manager is supported.
Comments Manager: Legal Services
The recommendation of the Acting Municipal Manager is supported.
RECOMMENDED BY THE ACTING MUNICIPAL MANAGER
1. That the current status of the Plettenberg Bay airport in relation to the use by commercial
aircraft be noted.
2. That it be noted that a meeting with the relevant stakeholders, and in particular with CemAir,
will be held on 17 August 2021.
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