In line with a national agreement, municipal councillors will receive a pay hike from July.
This is according to a city statement on Cape Town’s budget presentation, but is applicable across the country.
Mayor Dan Plato said during a budget discussion to council that a SA Local Government Association (Salga) increase of 6.25% for staff is included in the 2020/21 budget as per Bargaining Council agreements, and applies nationally to all municipalities.
In Cape Town, “councillors will receive only a 4% cost of living increase this year compared to 6% in other metros.”
Plato called on all councillors to donate back-pay of their cost of living increase to the Mayor’s Special Fund for food relief initiatives.
He said the city was also saving R450m in staff costs through a range of measures, including a limit placed on filling vacancies, a 50% reduction in annual performance increases for management, reductions in the appointment of consultants and training programmes, and a 50% portion of long service rewards being converted into additional leave.
Budget summary — rates up, distress funding
Council has approved the 2020/21 budget, which kicks in from July 1.
The budget provides for a 3.9% increase in property rates, 3.5% for refuse, 4.5% for water and sanitation, and 4.8% for electricity.
The Covid-19 budget impact is budgeted at R3.8bn, including more than R900m of additional Covid-19 expenditure.
A R3bn social package has also been passed to support the indigent, disabled and pensioners.
In his speech to council, Plato said: “We know that many have already lost their jobs or fallen on hard times. That’s why we are expanding indigent relief to persons earning R7,000 per month or less, and increasing the rates discount for many in this category.”
Residents with a property value below R300,000, or household income below R4,500, will get a 100% property and refuse rebate, 10.5 kilolitres of free water, 7.35 kilolitres of sanitation, and up to 60 kilowatt hours of free electricity.
A range of interest-free payment options are also available for struggling residents who have fallen behind on their rates.
More than 70% of the monthly costs of basic service provision comes from rates and tariff income, the city said.
Uber drivers in and around South Africa have taken a massive hit from the Covid-19 lockdown. The ride-hailing company has laid off 3,700 full-time employees around the world. While some South African Uber drivers have been forced to take additional jobs, others have resorted to taking underpaying “off-line” trips to try make up lost revenue.
Deputy mayor and finance MMC Ian Neilson said: “Most of the city’s income is from rates and tariffs and this money is used to provide basic services.
“We have already lost R860m in income over the last two months, with R386m in additional expenditure over the same time.”
Since the national lockdown commenced at level 5, the city had recorded a loss of income from rates and tariffs, MyCiTi public transport fares, the suspension of events by the Cape Town Stadium and Cape Town International Convention Centre, and parking and development fee decreases, among others.
Said Neilson: “We are preparing for an additional debt impairment of R1.4bn in the new financial year as debtors struggle to pay. We are doing our absolute best to assist with rates and services relief, payment arrangements and boosting our local economy.
“The city has made available more than R3bn in the new year for rates and service relief but we ask those who can still afford to pay, to please continue to do so. This is how we will get through this as one city, together.”
Neilson said the city has cut expenditure in many areas that are not urgent, to ensure continued service delivery without undue rates and tariff increases. He said internal funding sources from previous years have been fully employed in the new budget to help reduce the impact of the pandemic on residents and ratepayers.
City does not need to borrow to cover Covid-19 costs this year
Due to the impact of Covid-19 on revenue, the city said it would take out a R2.5bn loan for capital projects in the outer years of the budget, but that surpluses from prior years meant borrowing was not required for 2020/21.
Plato said: “Good governance is enabling us to absorb the estimated R2bn Covid-19 impact on our budget, without passing this burden onto residents. That’s why our annual rates increases are the lowest of all metros who’ve tabled budgets so far.
“My message to residents is this: ‘Hou uit, hou aan, en hou moed’ [hold out, hold on, and hold onto your courage]. We’ll get through these tough times.”