1. UPDATE on 2014 LG MTEC 3 UPDATE on 2014 LG MTEC 3 Anthony Phillips Chief Director: Public Policy Services

2. 2 LGMTEC 3 2014 Background The importance of annual budget & Integrated Development Plan (IDP) assessment is stipulated in: Chapter 5 of the Local Government Municipal Systems Act (Act 32 of 2000) (MSA), the MSA Regulations and the Local Government Municipal Finance Management Act (Act 56 of 2003) (MFMA). Sections 22 & 23 of MFMA obligates the municipality to solicit & consider comments on the tabled budget after its tabling and before the adoption. Draft Budget is tabled 90 days (i.e. 31 March) prior to the start of the budget year. Annual Budget is adopted 30 days (i.e. 31 May) prior to start of the budget year.

3. 3 LG MTEC/ IDP Indaba Process IDP Indaba (LG MTEC 1) To improve synergy between planning and budgeting LG MTEC 2 Distribute information on provincial allocations & spending LG MTEC 3 Comment & consultations on draft tabled Municipal Budgets

4. 4 Events leading up to Municipal Budget Tabling Tabling of Budget/ IDP process schedule (s21(b), MFMA) – 30 August Intergovernmental Consultation 1 (IDP Indaba1) – 16 & 18 September 1 st Round Public Participation – October/ November National & provincial departments inform National & Provincial Treasuries of allocations to municipalities (s36– 20 (1), MFMA – 20 January each year Intergovernmental Consultation 2 (IDP Indaba 2)/ LG MTEC2 – 4 to 26 February 2014 National Budget Day – 26 February 2014 Provincial Budget Day – 6 March 2014 Approval of Bulk Resource Tariffs – 15 March 2014 Tabling of Annual Budget – 31 March 2014

5. 5 LGMTEC 3 2014 - The New Approach Phase 1: January/February 2014: Pre-check and provide assistance where necessary Phase 2: Early April 2014: Check on conformance issues Phase 3: Late April/ Early May 2014: Engagement on municipal performance an 2014/15 budget

6. 6 LGMTEC 3 2014 – Dates (1) REGIONMUNICIPALITYDAY OF VISITTIME OF VISIT Metro City of Cape Town (Group 1)22 April 2014, Tuesday08:00 - 11:00 Central Karoo District Laingsburg (Group 2)23 April 2014, Wednesday08:00 - 11:00 Central Karoo District Beaufort West (Group 2)23 April 2014, Wednesday14:00 - 17:00 Eden District George (Group 1)23 April 2014, Wednesday08:00 - 11:00 Eden District Eden District (Group 1)23 April 2014, Wednesday14:00 - 17:00 Central Karoo District Central Karoo (Group 2)24 April 2014, Thursday08:00 - 11:00 Central Karoo District Prince Albert (Group 2)24 April 2014, Thursday14:00 - 17:00 Eden District Bitou (Group 1)24 April 2014, Thursday08:00 - 11:00 Eden District Knysna (Group 1)24 April 2014, Thursday14:00 - 17:00 Eden District Oudtshoorn (Group 2)25 April 2014, Friday08:00 - 11:00 Eden District Kannaland (Group 2)25 April 2014, Friday13:00 - 16:00 Eden District Mossel Bay (Group 1)25 April 2014, Friday08:00 - 11:00 Eden District Hessequa (Group 1)25 April 2014, Friday14:00 - 17:00 FREEDOM DAY 27 April 2014, Sunday PUBLIC HOLIDAY 28 April 2014, Monday

7. 7 LGMTEC 3 2014 – Dates (2) REGIONMUNICIPALITYDAY OF VISITTIME OF VISIT West Coast District Matzikama (Group 2)29 April 2014, Tuesday08:00 - 11:00 West Coast District Cederberg (Group 2)29 April 2014, Tuesday14:00 - 17:00 Overberg District Overstrand (Group 1)29 April 2014, Tuesday08:30 - 11:30 Overberg District Theewaterskloof (Group 1)29 April 2014, Tuesday14:00 - 17:00 West Coast District Bergrivier (Group 2)30 April 2014, Wednesday08:00 - 11:00 West Coast District West Coast District (Group 2)30 April 2014, Wednesday14:00 - 17:00 Overberg District Cape Agulhas (Group 1)30 April 2014, Wednesday08:00 - 11:00 Overberg District Overberg District (Group 1)30 April 2014, Wednesday13:00 - 16:00 WORKERS DAY 01 May 2014, Thursday NO ENGAGEMENTS 02 May 2014, Friday Cape Winelands District Langeberg (Group 2)05 May 2014, Monday08:30 - 11:30 Cape Winelands District Breede Valley (Group 2)05 May 2014, Monday14:00 - 17:00 Cape Winelands District Drakenstein (Group 1)05 May 2014, Monday08:00 - 11:00 Cape Winelands District Stellenbosch (Group 1)05 May 2014, Monday14:00 - 17:00 Cape Winelands District Cape Winelands District (Group 2)06 May 2014, Tuesday08:00 - 11:00 Cape Winelands District Witzenberg (Group 2)06 May 2014, Tuesday14:00 - 17:00 West Coast District Saldanha (Group 1)06 May 2014, Tuesday08:30 - 11:30 West Coast District Swartland (Group 1)06 May 2014, Tuesday14:00 - 17:00 Overberg District Swellendam (Group 2)07 May 2014, Wednesday08:30 - 11:30

8. LG MTEC 3 Parameters

9. 9 LGMTEC 3 Report Outline LG MTEC3 Assessment/ Engagement based on combined Assessment Framework by DLG and Provincial Treasury DLG Assessment focused on Compliance and Responsiveness of IDP PT Assessments guided by framework with 4 main components eg. Conformance: compliance with MBRR Responsiveness: How budget responds to socio economic conditions, Credibility: Is the budget funded, realistic and implementable and Sustainability: Is the budget supported by adequate cash resources that will last over at least the MTREF (3) period

10. 10 Responsiveness Has the IDP of the municipality been reviewed taking cognisance of Section 34 of the MSA regarding: Is a performance management system in place as stipulated in Chapter 6 of Section 41 (a) of the MSA ? Preparing for an IDP Review: process plan/time schedule ; public participation; review; any shortcomings in the original preparation of the IDP process been incorporated as improvements in the reviewed IDP? Monitoring: Does the IDP Review contain sufficient information that measures progress with the implementation of programmes and projects through a series of indicators that have been set, to determine whether the outcomes strived for have been achieved. Evaluation: Has informatio n gathered in the process of monitoring the IDP process been packaged in a way that facilitates discussion by the Representative Forum for discussion and decision making by Counc il? Review: Does the reviewed IDP of the municipality contain a refined understanding of the situation around  priority issues: Assess how local budget priorities are aligned to support national & provincial budget priorities.  refined/amended/additional objectives  revised or new strategies, including strategies to improve implementation

11. 11 Responsiveness cont.. Has the Spatial Development Framework of the municipality been adopted and reviewed as part of the IDP? Has the Water Services Development Plan of the municipality been reviewed? Alignment: Assess how the local IDP and budget priorities reflect national/provincial support initiatives. Conformance: Applicable MBRR table s have been completed Conduct independent socio-economic analysis. Assess draft SDBIP for SMART-ness, appropriateness and relevance

12. 12 Credibility Are the revenues projected in the budget realistic and anticipated as required by s16 of MFMA? Municipal tariff increases are in line with the parameters or guidelines provided by NT/NERSA Sensitivity Analyses: Trend of revenue increases in relation to the increase in municipal service charge tariffs. Tariff affordability Compare tariff levels and increases across a number of “similar” municipalities based on regional GDP, average income levels, indigent population and unemployment? P3 Tariff modelling : Has the P3 Tariff Model been implemented in the setting of service charge tariffs?

13. 13 Credibility cont.. The municipality use credible budgeting principles, techniques or methods Operating Expenditure i s based on the legitimate needs of the municipality?  The total employee cost is based on an approved organogram and had been discounted to take into the impact of vacancies? Capital Expenditure is based on the legitimate needs of the municipality/community  The capital budget is fully aligned with the socio-economic realities faced by the local authority? The municipality prepared the budget in line with the requirements of the legislation Municipal tariffs used as mechanism to attract private sector investment

14. 14 Sustainability Cash Flow Status of the Municipality Credit Risk Status of the Municipality Investment Status of the Municipality Funding of the Budget Going Concern Assessment Conformance Status (Cash Related Tables)

15. 15 Sustainability cont… Compare applicable MBRR tables against audited AFS The analysis and interpretation of the Financial Ratios will be linked to SA8 (Performance indicators & benchmarks)  Expenditure Management  Revenue Management  Liability Management  Asset Management  Working Capital & Sustainability  Other Indicators o Electricity Distribution Losses (Percentage) o Water Distribution Losses (Percentage)

16. Thank you