Overstrand Municipality Budget Speech – 2020/2021

During a virtual Council meeting held on Wednesday, 27 May 2020, in Hermanus, Gansbaai and Kleinmond, Executive Mayor Dudley Coetzee delivered the following address regarding approval of the 2020/21 budget.

The full Council of Overstrand Municipality has unanimously approved its budget.

Speaker Anton Coetsee said it is a really remarkable achievement and that it reflects a tremendous vote of confidence in the Mayor and Municipal Manager and Administration as a whole.

The Mayor’s speech, is published below:

Today the third review of our 5 year Integrated Development Plan (IDP) and 2020/2021 Budget will serve before Council.

For 2020/2021 our strategic direction set in the 5 year IDP remains unchanged. The IDP review articulates the development needs of our communities and the Municipality whilst also stating the specific initiatives for the 2020/2021 financial year.  You will recall that the Municipal Budget funds the delivery of the IDP.

The national lockdown, imposed as a result of the COVID-19 virus, and the various regulations promulgated by National Government under the National State of Disaster, has unfortunately had a devastating effect on the economy of South Africa and Overstrand is no exception.

The tourism industry which forms the backbone of the Overstrand economy came to an abrupt halt on 26 March this year.  This has had an adverse effect on many of our businesses, particularly smaller businesses as well as our ratepayers.     

Comments received from the public on the 2020/2021 Draft Budget mostly concerned the effect that COVID-19 has, and is having on our economy.

Considering the effects that the COVID-19 Lockdown is having on our economy as well as the comments received from the public, the Draft Budget could not, as in the past, simply be adjusted the entire budget had to be revised.

In this Budget we have considered the impact that COVID-19 has had on our ratepayers as well as on the ability of the Municipality to continue to operate and provide infrastructure and a high level of services that are only fully used during relatively short holiday seasons.

Following a number of reductions in the interest rate, the Reserve Bank has forecast an inflation rate for the 2020/2021 financial year of 4,7%.

Given the current challenges that our ratepayers and the Municipality face, the increase in all Municipal tariffs with the exception of electricity will be reduced from the proposed 5,9% in the Draft Budget to 4,5%.  This includes the first 6kl of water consumed.  The cost of electricity from ESKOM to the Municipality will increase by 6,9% and in terms of the directive from NERSA the electricity tariff to Municipal consumers, will increase by 6,22% a decrease from 15% that was included in the Draft Budget.

The increase in Property Rates will also be reduced from 6,9% proposed in the Draft Budget to 4,5% for all categories of Property.

Special Rating Areas have been approved for Hermanus, Onrus-Vermont and Kleinmond.  The rate requested varies per area and is included in the list of tariffs.  I wish to thank the chairpersons and members of the three steering committees for their work and dedication in finalizing these SRA’s on behalf of their respective communities.

As in the past, an amount R6,5m or R500 000  per ward, has been budgeted for ward specific projects that are infrastructure related.  To contribute to reducing expenditure, no budget is provided for the Mayoral Fund nor is funding provided for grants-in-aid or contributions towards festivals.

In March, Council approved that businesses and residential ratepayers who found themselves under financial stress may enter into an extended term payment agreement with the Municipality for their March and April Municipal accounts.  Today I will ask Council to extend this concession to include the May and June accounts as well.  For tenants who cannot use the property rented from the Municipality, for the purpose for which it was intended, I will also ask Council to extend the exemption from paying rent until the end of June.

As mentioned earlier the tourism industry has been particularly hard hit by the lockdown regulations.  Consequently I will ask Council to approve a temporary adjustment for all accommodation establishments to be charged the residential property rates tariff retrospectively from April through to June.

Given the uncertainty of how long the various lockdown regulations will remain in place the above concessions may well have to be extended in the new financial year.

The current three year collective SALGBC salary agreement for Municipal employees came into operation on 1 July 2018.
Municipalities must, in terms of section 71 of the Local Government:  Municipal Systems Act, Act 32 of 2000 comply with collective agreements. 

According to the principles of the agreement, salary increases were approved at 6,25 % for the 2020/21 financial year. This was based on the average inflation for the period February 2019 to January 2020, with a minimum of 5%, plus 1,25%.  Salary notch adjustments of approximately 2% have also been included in the salary budget.

The remuneration of Councillors is determined by the Minister of Co-operative Governance and Traditional Affairs.  The proclamation with regard to the 2019/2020 increases was only published during April 2020 and set salary increases at 4%. 

No indication for 2020/21 has been received and therefore remuneration adjustments for councillors has been factored into the 2020/21 budget at the same rate as the 2019/2020 determination.

The 57 new permanent staff positions included in the Draft Budget have been withdrawn.  This includes the additional Law Enforcement staff.  The Law Enforcement Division will be reorganized to allow for the K9 units planned for Gansbaai and Kleinmond to be established.

The Driver’s Licence testing centres planned for these two areas have been postponed.

To assist in rebuilding the economy of the Overstrand R15m has been provided for temporary positions to help in creating jobs for our residents.

All items of a Capital nature that can result in job creation for our people have also been included in the budget, particularly where this will address ageing water reticulation systems, as well as sewerage projects, and importantly also, storm water projects.

To this end the following items have been included in the Capital Budget:

  • Zwelihle Sewer Upgrade                   R 13,75m
  • Zwelihle Stormwater Upgrade           R  8,39m
  • Kleinmond Sewer Upgrade                R 13,00m
  • Masakhane Stormwater                    R  4,50m
  • Overhills Stormwater                        R  2,2m
  • Betty’s Bay Stormwater                     R  3,31m
  • Hermanus Stormwater                     R  2,60m
  • Hermanus Waste Recycling Plant       R 17,96m
  • Hawston Sports Complex                  R  9,44m
  • Hawston Business Hub                      R  4,87m
  • Mt Pleasant Sports Field                   R  2,46m
  • Hawston R43 intersection                 R  2,19m
  • Hermanus Well fields                       R 10,5m
  • Pringle Bay Reservoir                       R  6,13m
  • Gansbaai Reservoir                          R  7,88m
  • Hermanus CBD Regeneration            R  7,10m

Level 2 water restrictions in the Hermanus area introduced from 1 June 2018 are still applicable. The first level of water restriction tariffs is also still applicable in Hermanus.

In summary the proposed increases for a household for the coming financial year (2020/2021) are as follows:

  • Property rates: Residential               4,5%
  • Electricity                                        6,22%
  • Water                                             4,5%
  • Sewerage tariffs                              4,5%
  • Refuse tariffs                                   4,5%
  • Property rates for business and undeveloped erven will also increase by 4,5%.

The average increase of a household Municipal account will be about 4,4% excluding electricity and 5,3% including electricity

I would like to take this opportunity of thanking the Public for their participation and input during the IDP Review – and Budget preparation process.

I also wish to extend my sincere appreciation to the Councillors and the Administration who contributed to compiling the 2020/2021 Operating and Capital Budgets.  Particularly those who literarily worked night and day to complete the total revision of the Draft Budget and so enable us to table the 2020/2021 Budget today.