Finance and Economic Opportunities
Whether the Province plans to allocate to each ward their own budget to address economic and social development needs of communities as identified by each ward, if not, why not, if so, what are the relevant details?
The Province does not plan to allocate a budget to each ward. This is due to the nature of the functions provided by provinces and economies of scale in providing those functions.
Municipalities are better positioned to make allocations to wards. To understand how budget allocations are made to local communities, one needs to briefly unpack the local government funding model. Municipalities are funded from primarily two main sources namely a) own-revenue, which is generated through property taxes and charging a fee for the provision of services such as water and electricity. This can be leveraged through borrowings against future revenues; and b) grants and subsidies received from national and provincial government. Grants and subsidies are allocated on either a conditional (specific purpose) or unconditional (equitable share of revenue raised nationally) basis. It however remains the prerogative of a municipality, as a separate sphere of government, to decide how allocations are applied throughout its jurisdiction. It is for this reason that public participation in the budget and planning process is of such crucial importance for local communities to flag their service delivery needs. Cognisant of service delivery priorities and the financial resources at its disposal, a municipality will allocate resources equitably to various wards. This will include resources allocated to initiatives that support multiple wards or the entire municipal area, for instance through investment in bulk infrastructure.
Details of ward-specific budget allocations are contained in a municipality’s annual service delivery and budget implementation plan (SDBIP). The SDBIP is essentially the management and implementation tool which sets in-year information, such as quarterly service delivery and monthly budget targets, and links each service delivery output to the budget of the municipality. It thus provides credible management information and a detailed plan for how the municipality will provide services and the inputs and financial resources it will use. The SDBIP should also provide all expenditure information (for capital projects and services) per municipal ward, so that each output can be broken down per ward, where this is possible, to support ward councillors in service delivery information. A SDBIP contains a detailed capital works plan which specifically indicates in which ward a capital project will be developed and how much funding will be allocated to the project across the medium term. This capital works plan corresponds to supporting schedule SA36 in a municipal budget.
