This is what we think about the Govan Mbeki Municipality budget for 2019/20, which takes effect on 1 July 2019.

• The municipality budgets for a deficit which is illegal. The deficit is recorded as R310m but is actually R415m. The figures are manipulated by adding grants for capital expenditure to operational expenditure, effectively double-counting those grants.

• Operational spending jumps 39% from R1.737bn to R2.416bn.

• Revenue is planned as increasing 15% from R1.470bn to R1.687bn (the revenue from services is based on what the municipality bills customers, not what it collects), but this is unrealistic as the municipality has a collection rate of 67%.

• Provision for bad debts more than triples from R73m to R234m.

• Bulk purchases of water and electricity are projected to cost R915m, against charges to customers of R971m. That R971m must also cover staff and maintenance costs, and assumes that everyone pays their bills.

• There is no provision to pay the R1.1bn arrears owed to Eskom and Rand Water.

• There’s no plan for dealing with water and electricity losses. Financial reports to Treasury show that Govan Mbeki spent R761m on bulk purchases of electricity and water from July 2018 to March 2019, but lost so much that it could only bill residents R641m for those services. At recent public meetings in Embalenhle, where power has been off for months, municipal officials blamed outages on residents’ overuse and illegal connections but failed to explain their own lack of planning.

• Employee costs go up 22%, from R488m to R594m, with no explanation.

• Spending on contractors is R279m, which is 11% of total spending, despite the Treasury standard of 2-5% of total spending. Why is so much spent on contractors when staff costs are hugely increased?

• There are no details of spending in each department, comparisons with previous years, salaries for senior managers, tables of financial performance and cash flow, or basic service delivery measurements.

• The draft budget planned to spend R700 000 on a new car for the mayor and more over the next two years (a total of R2.2m over three years); the budget tabled for approval deletes this.

• The draft budget increases water and sanitation tariffs by 5.2%, but the final budget ups this to 7.9%. This is due to failure to plan for Rand Water’s increase of 7.9%, although this was announced in January.

• Some tariffs are set below the cost of buying bulk electricity and water. This includes a “Special Tariff Agreement” which sells water at about two-thirds the cost of buying it.

• The capital budget includes three refuse compactor trucks at R7m but the municipality bought five compactor trucks in January.

• Spending on some contractors increases hugely without explanation. For example, reading of meters jumps from R8m to R20m and an electrical contract goes from R25m to R40m.

• The Auditor General gave Govan Mbeki an audit disclaimer for 2017/18, an even worse opinion that the qualified opinion of the previous two years. When the finances are in such chaos, it is extremely difficult to draw up a realistic budget.

Govan Mbeki’s draft budget for 2019/20 is here. The final version is not online.