Ratepayers in Buffalo City Metro should brace themselves for possible rates hikes in July.
BCM mayor Xola Pakati has proposed that property rates be hiked by 6.25%. He wants electricity tariffs increased by 6.23%, waste removal and water services by 9.2% and sewage services by 9.2%.
The metro also wants to increase workers’ salaries by 6.2%.
These proposals are contained in a draft 2020/21 budget report that Pakati tabled in a virtual council meeting on Friday.
Councillors did not vote on the matter, demanding a workshop before giving it the thumbs-up or -down.
The DA recorded its unhappiness at the package, saying that, if passed, already hard-pressed consumers would be hardest hit, with the number of indigent people increasing in the city.
Organised business also slated the proposed hikes, complaining its request for a rates holiday of three months had hit a blank wall of silence.
On Sunday, Pakati said a rates holiday would collapse the municipality.
Residents have for years complained about getting too few electricity units. But Pakati said the proposed tariff was “in line with National Electricity Regulator of SA (Nersa) guidelines”.
Nersa’s guidelines state that tariffs should not increase by more than 6.22% with applications that exceeded that mark strongly motivating as to why that was the case.
DA councillor Geoff Walton told DispatchLIVE at the weekend the proposed increases, when SA’s economy was in a technical recession worsened by Covid-19 and the lockdown, would be devastating for residents.
“We are concerned about the indigents, and we are predicting there will be more indigents as people become unemployed.
“We would prefer no increases during this time if it is at all possible and we urge them to do that,” he said.
Walton said should salaries be increased by 6.25%, the city might struggle to deliver some services.
“We are also concerned about the increasing staff costs. They are starting to crowd out the other issues. Staff costs in this year are about 32% of the budget, and that is quite a big amount.
“The more we pay towards staff costs, the less we will have towards other things like maintenance.”
Councillors unanimously resolved to give themselves 4% salary hikes in May.
In his report, Pakati said the 6.25% increase was factored into employee costs in line with a salary and wage collective agreement.
Walton said the proposed increases would be a blow to ratepayers.
“There are a number of issues we are opposed to, but the first concern is whether the budget is realistic.
“They are basing the budget on a 90.5% collection rate, but we’re not getting close to that — and that was before the Covid-19 lockdown created more problems for the municipality.”
Walton said the metro’s collection rate in April was 83%.
“Budgeting on the assumption that we will get 95% of people paying in cash should be reduced to a more realistic figure. They could go with 80%.”
Border-Kei Chamber of Business executive director Les Holbrook described the proposed increases as wrong.
“At the beginning of the lockdown, the chamber wrote to the municipality and we asked them for a rates holiday. We asked the municipality to give consumers, and especially the business sector, a three-month holiday.”
This would have meant the municipality suspended business accounts, worked on a repayment plan after three months and caught up over the year, Holbrook said.
“We have not heard from them since we wrote the letter. Other organisations wrote similar letters, so there is a big appeal out there for the municipality to give some kind of relief to consumers.
“If they are [asking] council to approve an increase, that is very irregular. It is unthinking and uncaring.”
Pakati said they had engaged stakeholders, including the Border-Kei Chamber of Business, on the impossibility of offering a rates relief.
“It will not be possible to have a suspension of revenue without risking collapsing the municipality. Businesses are making a profit as we speak, so there is no reason for us not to collect revenue. Their demands do not make sense, but [are] a call to collapse the municipality.”
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.