BUSINESS NEWS - The current state of municipal finances poses the greatest threat to local government’s ability to provide basic services as enjoined by the Constitution.
This has been exacerbated by the economic conditions and the less than desirable relations between the public and public representatives or municipalities.
Consequently, the performance of municipalities has deteriorated, and public despondence has taken root, which in some cases has led to non-payment of municipal services.
To adequately respond to these challenges in municipalities and to ensure that they are able to provide the required services, we need a social compact premised on responsible citizenry and an accountable leadership. It goes without saying, that the relationship between municipalities and communities should be of symbiotic nature, ensuring mutual beneficiation and responsibility.
To this end, we need to understand municipal financing and the provision of services as a value-chain that requires both ends of the system to function sufficiently.
The biggest portion of municipal revenue is generated by trading services (electricity, water, and sanitation) which forms the basis for sustainable provision of municipal services. In aggregate, revenue from trading services accounts for over 60% of local government revenue. The major source of tax revenue for municipalities is property rates which generates around 20%of total revenue.
Without the payment of municipal rates by ratepayers, municipalities are unable to cover running costs and that of certain development projects initiated within various communities to facilitate the delivery of services.
To this effect, everyone who benefits from the municipal services, except for indigent households, is obliged to pay in aggregate the costs of services consumed. Government, as part of its social protection to address challenges of poverty and unemployment is subsidising 10,2 million poor households in municipalities to the value of R56.3 billion (2021 Division of Revenue Bill).
Those who believe that they fall within indigent category, should register with the local municipality to access this subsidy estimated at R414 per month per poor household. The subsidy includes funding for the provision of free basic water (six kilolitres per poor household per month), energy (equivalent to 50 kilowatt-hours per month) and sanitation and refuse removal (based on service levels defined by national policy).
Integral to responsible citizenry is activism, which is premised on active participation and the need for communities to balance the right to receive services with the incumbent responsibilities to pay for services consumed. “Play your part to transform district spaces for inclusive socio-economic growth and development”, by being a responsible citizen that pays for municipal rates and services.
As the saying goes ‘Paying is Caring’ - because local government is everybody’s business.
'We bring you the latest George, Garden Route news'