City of Johannesburg mayor Geoff Makhubo says the city will offer significant debt write-offs to qualifying ratepayers through its debt rehabilitation programme. In his state of the city address on Tuesday (4 May), Makhubo said that minimising the effects of the Covid-19 pandemic in cities has become an active feature of post-Covid urban management strategies. “As a response, the city – through council – approved a debt rehabilitation programme that includes additional relief measures for ratepayers amidst the ongoing Covid-19 pandemic. “The new programme includes an increase in the qualifying property value from R600,000 to R1.5 million following calls from residents for the city to review the terms and conditions of the initial relief programme, which was first launched in 2019. “The improved relief programme will see qualifying ratepayers receive immediate relief through a 50% debt write-off.”
Speaking to EWN, the city said that the relief programme would see qualifying ratepayers receive immediate relief through a 50% debt write off – following which the other 50% could be written off if certain conditions are met. “If they continue to pay the city for the current consumption, including rates and taxes over a period of three years without fail, we then write off the other 50%,” it said.
Speaking on the current state of the city’s finances, Makhubo said that when he assumed office in December 2019, he inherited an institution that was both lacking experience and riddled with governance failures in areas of procurement. “Moreover, the city’s internal systems neared collapse, low revenue collection, financial mismanagement was high, record irregular expenditure, absence of the city on all international platforms, and demoralized local government staff among a myriad of challenges.” Despite these issues and the challenging institutional and macro-economic environment due to the pandemic, Makhubo said that the city managed to collect 86.3% of the revenue, against an adjusted Covid-19 risk target of 88% for the 2019/20 financial year, as well as acquired a surplus of R3.7 billion for 2019/20 FY. “Encouragingly, the city still collected more revenue by 6%,” he said. “Furthermore, the city’s Financial Position is in solid standing, with total assets increasing by 5%.”
Rate increases: Joburg’s draft Integrated Development Plan (IDP) and the Medium-Term Expenditure Framework Budget published at the end of March proposes increases of around 14.59% for electricity and 6.8% for water. The city’s mayoral committee member for Finance in the City of Johannesburg, Jolidee Matongo, said a big percentage of the city’s annual operational and capital expenditure is funded from property rates tax levied on domestic and commercial properties.
There are also service charges on electricity, water, sewerage and refuse. The city also earns interest from fines, forfeits and penalties. A marginal portion is earned from operating grants. To remain financial sustainable, tariff increases have to be considered. “The city is not oblivious to the current economic environment, made worse by the current pandemic,” he said.
“We would have preferred to table a zero-increase in tariff proposals, but should we go this route, the city will place its own liquidity at risk. It is also important that we exercise financial prudency to meet service delivery imperatives expected by ratepayers and residents.”
Matongo said that residents can still give feedback in relation to tariff proposals in the reports. “The post-tabling public consultation process, as stipulated by the Municipal Systems Act, will allow residents and stakeholders to comment on the draft budget and IDP within the next 30 days after the reports have served at Council. Stakeholders will be consulted through various engagement methods. “We are determined to continue to improve the daily lived experience of our residents and that is why we need residents to give us inputs on the draft budget and IDP.”