From a press statement issued by Cllr. Kevin Mileham on behalf of the DA’s Buffalo City Caucus on 28/9/2011:
The Democratic Alliance has expressed its outrage over the preliminary financial results submitted by BCM to National Treasury at the end of the financial year in June. According to these figures, Buffalo City underspent on conditional grants by some 20%, underspent on capital expenditure generally by approximately 47%, and incurred irregular expenditure of R197 million.
In addition, according to documentation available from the National Treasury, the city only collected some 91.2% of its (adjusted) budgeted operating revenue, while spending 92.4% of its budgeted operating expenditure. In rand terms, actual revenue amounted to R2.719 billion, while actual expenditure was R3.01 billion. The municipality is therefore running at an operating deficit of R291 million, the third such deficit in consecutive years. The over-expenditure related primarily to bulk purchases (such as electricity and water) and employee costs – both running at nearly 102% of adjusted budget.
Cllr. Kevin Mileham, the DA’s spokesperson for finance in the municipality said that poor financial controls and a lack of capacity were a large part of the problem. “We have had an acting Chief Financial Officer several years now, and, as yet, no steps have been taken to appoint someone permanently to the position,” said Mileham. “This is contrary to the amended Municipal Systems Act, which provides for a person to serve in an acting capacity for no more than 3 months. The problem is replicated throughout the organizational structure of the municipality.” Mileham pointed out that, according to internal municipal reports recently tabled in Council, the city’s debt was growing at more than R9 million per month. “The hole we are in is just getting deeper,” he said.
Mileham indicated that consecutive deficits for 3 or more financial years could be sufficient to trigger a provincial intervention in terms of s138 of the Municipal Finance Management Act. The Democratic Alliance has repeatedly called for greater transparency and accountability in Buffalo City’s finance department, and in particular in the supply chain management function. “Nobody takes responsibility,” said Mileham. “Everyone from the City Manager down blames someone else for the poor performance.”
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