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Govt rejects Bulawayo's 2022 budget

by Staff reporter
23 Jan 2022 at 08:00hrs | Views
BULAWAYO residents will heave a sigh of relief, at least for this month, as they will be billed using last year's rates after the Government rejected the local authority's proposed 2022 budget, Sunday News has established.

This year's budget was rejected on the basis of allocating a huge chunk– 44 percent– to salaries against the Government stipulated 30 percent, among other reasons. Council had come up with a budget that would have seen some households paying an average of $12 000 per month before factoring in water charges as the local authority targeted to introduce various fee increases ranging between 155 percent and 687 percent.

At the end of last year, the local authority was  forced to marginally reduce its budget projections from $24 billion to $23 billion after residents raised concern over the proposed increase that was initially suggested by the local authority. At the onset of the 2022 budget consultation exercise, the local authority announced a $24,7 billion budget with $16,8 billion being the revenue budget while $7,9 billion was the capital budget. Council then decided to slash the proposed budget by $900 million to $23,8 billion after concerns from residents. Of the $23,8 billion, $15,9 billion was the revenue budget, while $7,9 billion was meant to be the capital budget.

However, in the latest development, the Government, through the Ministry of Local Government and Public Works has since rejected the budget, which the local authority had submitted for approval. This means the local authority could have to wait a little longer before factoring the proposed rates, with residents having to pay their rates as per the December bills.

However, the Town Clerk, Mr Christopher Dube, downplayed the rejection, saying Government had only raised a few technical issues which they had since addressed and returned to Government, with the hope that the budget will now be approved.

"The Ministry just noted a few technical issues which we had to call a special council meeting for them to be deliberated on, and endorsed by the councillors, as we could not amend the budget without any council resolution.

As things stand for now, we have submitted the amended version to Government and we are hopeful that the budget will now be approved by Government any time, actually I was even expecting that it will be approved by today (Friday)," said Mr Dube.

Among the issues raised by the Government, in rejecting the budget, was the failure by the local authority to align the income and expenditure statement to the Government economic policy document, National Development Strategy 1. The local authority had once again failed to adhere to the 30 percent wage bill  to 70 percent service delivery expenditure ratio, instead directing 44 percent to staff costs.

"Follow up on approvals were made with the Ministry during December 2021 culminating in all local authorities being invited to meet the Minister from 10 to 15 January 2022. Council was represented by the Mayor, the Chairman of Finance and Development, Town Clerk, Financial Director and the Finance Manager – Accounting Services.

During the discussion with the Minister a number of issues were raised and council responded and addressed these issues and changing Capital Funding to accommodate Zinara funding of $338 million- figures were supplied in December 2021- and Devolution Funding of $1,1 billion, figures came after budget had been approved by Council," reads a council report on the issue.

The Ministry is also said to have raised concern over the failure by the local authority to fulfill statutory obligations such as paying their dues to the Zimbabwe Revenue Authority (Zimra), Zesa and the Local Authorities Pension Fund (LAPF).

In response, council reported that it was now current as far as Zimra obligations were concerned and that the local authority will no longer have set-offs with the tax collector, but will be paying its obligations directly as they arise.

"Council entered into an arrangement with LAPF to pay off the amount due through an instalment of $11 million per month. If all goes well it should be back to current within six months. It is also paying pensioners on behalf of LAPF thereby reducing its obligation.

"Council is also working on a strategy to improve collection efficiency through setting up a fully-fledged Debt Management Unit in line with our new Credit Policy. This initiative will translate to the reduction in debts and improvement in revenue flows. Council is in discussion with Zesa and we hope the matter will be settled in the immediate future," reads the report.

The local authority also justified the 44 percent  ratio going towards staff costs saying council services were labour intensive.

"The state of the city, province and national economy is such that operations are labour intensive. This proportion will decrease as the local economy grows. Further, the Poverty Datum Line now stands at $76 000 whereas the salary of lowest paid worker in council is $25 550. Union's demand to improve the buying power of the worker may not maintain the ratio of staff costs at 30 percent in the short term.

The Debt Management Unit that has been set-up is expected to improve the revenue flows of council and reduce employment costs to the recommended benchmarks," reads the council report.

Source - The Sunday News