1. BUDGET PROCESS

2. BUDGET & BUDGET PROCESSES

3. INTRODUCTION Budgeting is a careful balancing act Input from all stakeholders considered and prioritisation In compliance with the Municipal Structures Act and MFMA the City’s Budget must be informed by and aligned to the IDP objectives. The budgetary allocations for both Capital and Operating expenditure needs to be undertaken in a manner that will not only ensure that the IDP outcomes are achieved but also leads to the City’s vision being realised It is a process not an event and requires continuous improvement to the Budget and IDP processes to ensure a seamless process eventually

4. INTRODUCTION Council is required to have the three year capital and operating budgets i.e. Medium Term Revenue and Expenditure Framework(MTREF) The format for documentation is standardised by National Treasury Budgets linked to current and future developments prioritized in the IDP and other budget related policies Expenditure and Income are appropriated under different votes Realistically anticipated revenue per source is set out There is a consultative process(e.g. public hearings) after the tabling of the budget Councils are responsible for approving budgets There are 2 types of budgeting i.e. operating and capital There are different methods of budgeting e.g.. incremental, zero-based, project based etc.

5. MUNICIPAL ACCOUNTABILITY CYCLE 5 IDP Budget SDBIP In-year Reporting Annual Financial Statements Annual Report 5 year Strategy Three year Budget Annual Plan to Implement Monitoring Oversight Reports SDBIP In - year Reporting Annual Financial Statements Annual Report 5 year Strategy Three year Budget Annual Plan to Implement Monitoring Oversight Reports

6. IDP – EIGHT POINT PLAN 1.Develop and Sustain our Spatial, Natural and Built Environment. 2.Developing a Prosperous, Diverse Economy and Employment Creation. 3.Creating a Quality Living Environment. 4.Fostering a Socially Equitable Environment. 5.Creating a Platform for Growth, Empowerment and Skills Development 6.Embracing our cultural diversity, arts and heritage. 7.Good Governance and Responsive Local Government. 8.Financially Accountable and Sustainable City.

7. FINANCE RELATED POLICIES

8. ASSESSMENT RATES POLICY CREDIT CONTROL AND DEBT COLLECTION POLICIES INVESTMENT POLICY BORROWING POLICY ACCOUNTING POLICY FUNDING AND RESERVES POLICY BUDGET POLICY SUPPLY CHAIN MANAGEMENT POLICY

9. Consultation on tabled budget 4 Budget preparation process 1 Budget implementation 7 Publication of draft annual budget 3 Approval of annual budgets 5 Tabling of draft budget 2 Publication of approved annual budget 6

10. 10 The mayor to lead the budget process at least 10 months (ie by 31 August) prior to the start of each financial year by developing a timetable of key deadlines relating to the Budget, IDP, SDBIP, Annual Report and Performance Management processes Multi year capital and operating budgets Linked to current and future priorities contained in the IDP and other policies Draft is tabled to Council 90 days before the beginning of the financial year Budget Road Shows (Izimbizo) are conducted in April and May, All the public input are considered before the budget is approved Final Adoption should be at least 30 days before the beginning of the financial year The budget (Draft and Approved) is submitted to National Treasury and they assess and comment

11. 11 The mayor to table the budget(Draft) before Council by 31 March annually The tabled budget must be credible and capable of being approved as is and must be a multi year capital and operating budget (MTREF) Table budget linked to current and future priorities contained in the IDP and other policies The table budget is for consultations and may be subject to revision The draft Service Delivery and Budget Implementation Plan (SDBIP) and reviewed budget related policies are also tabled with the budget TABLING OF DRAFT BUDGET

12. PUBLICATION OF TABLED BUDGET  Immediately after budget is tabled – MM make public the annual budget (document per S17)  Invite local comments to make submissions  (i) Submit annual budget in both presented and electronic formats to National Treasury – relevant Provincial Treasury (ii) National/Provincial Organs of State and to other municipalities affected by the budgets  How is budget publicised(DER) – Budget Documentation (i) Website(Councils) (ii) Newspapers/(Ezasegagasini) (iii) Radio Interviews etc. (iv) Copies available at Libraries and Regional Centres

13. CONSULTATION ON THE BUDGET  After Tabling – Consultation process. Who do we consult with : (i) Local Community (ii) National and Provincial Treasury (iii) National and Provincial Organs of State and other municipalities affected by the budgets  How do we get the local community involved? (i) IDP Ward Roadshows (ii) Big Mama Workshops (iii) Ward and Public Hearings  Mayor to consider submissions and revise budget and also table amendments for council to consider

14. APPROVAL OF THE BUDGET Council considers approval council approval of the budget at least 30 days prior to the start of the budget year – by 31 May Approval via a resolution and includes approval of: (a) Rates (b) Tariffs eg. Main tariffs: Electricity, Water, Sanitation and Refuse and other user charges eg Community Hall Hire etc (c) Measurable performance objectives for revenue from each source for each vote (d) Changes to the budget related policies and IDP The budget must be approved by 30 June The approve budget must be place on the Council’s website within 5 days Submit annual budget in both presented and electronic formats to National Treasury – relevant Provincial Treasury, National/Provincial Organs of State and to other municipalities affected by the budgets

15. IMPLEMENTATION/MONITORING OF BUDGET Accounting Officer responsible for implementing the budget The spending of funds in accordance with the budget per MFMA Revenue and expenditure are properly monitored Unauthorised expenditure must be reported and may result in disciplinary or criminal action Monthly reports in terms of section 71 of the MFMA on performance against the budget is submitted to Council Mid year budget and performance assessments are submitted to Council by 25 January each year interms section 72 of the MFMA Within 30 days after each quarter a report is submitted to Council on the implementation of the budget and the financial state of affairs ito Section 52 of the MFMA Performance against the capital budget is monitored via CAPMON and the K100 team on a monthly basis

16. SERVICE DELIVERY AND BUDGET IMPLEMENTATION PLAN (SDBIP) The SDBIP serves to provide an implementation plan that covers all functional areas of the municipality and focuses on actual implementation and delivery with mechanisms for regular review Service Delivery and Budget Implementation Plan – Quantitative Measures (Targets) based on the IDP eight point ie deliverables on the budget 14 Days after budget is approved to mayor (by municipal manager). Thereafter make public – Normally via website Mayor approves 14 days later – (28 days after budget approval) Quarterly reports on performance against targets are submitted to Council and National and Provincial Treasuries

17. 17 A municipality may revise an approved annual budget via an adjustments budget An adjustments budget is the utilisation of projected savings in one vote towards spending under another vote. ( A virements budget is the utilisation of savings within the same vote) VOTE = CLUSTER An adjustment budget may be tabled in the Municipal Council at any time after the Mid-year Budget and Performance Assessment has been tabled in the Council, but not later than 28 February of the current year Only one adjustment Budget may be tabled in the Municipal Council during a financial year, except: o when additional revenues are allocated to a municipality in a national or provincial adjustment budget or via institutional grants o to authorise unforeseen and unavoidable expenditure o to authorise roll-overs from the previous financial ADJUSTMENTS BUDGET

18. MUNICIPAL ENTITIES We have 2 municipal entities i.eg ICC and Ushaka BUDGETS 150 Days prior to start of the budget year – to parent municipality Council can make recommendations re budgets and business plans Revised Budget to be re submitted 100 days before commencement of new year Entities budget must be approved with the parent municipalities budget

19. CAPITAL BUDGETS 19

20. 20  Major strain on capital budget due to increased demands and eradication of backlogs  National Treasury model utilized to determine 10 year Budget and to assist with prioritization  Capital budget has 5 key focus areas: - Social - Economic - Asset Management/ Rehabilitation - Environmental - Admin and support systems  Model also projects operating expenditure and impact of capital on growth and income CAPITAL BUDGET

21. CONCLUSION A good budget is aligned to the fundamentals of a prosperous City :  Need to ensure sustainability both financial and environmental  Job creation and improved productivity and strive to achieve the three E’s ie Economy, Efficiency and Effectiveness  Good quality of life  Good growth prospects  Does not ignore global issues “Pain is temporary, accomplishment is forever”