The Bulawayo City Council has unveiled a $1.1 trillion budget for next year which will see tariffs increase by 150 percent in January and by a further 100 percent in July.
Residents will, however, only finance the $775 billion revenue budget. The council will finance the bulk of the $326.97 billion capital budget from borrowing. Only $270 million of the capital budget will be financed from service connection fees and from the revenue budget.
Under the proposed budget, which awaits government approval, residents in the high-density suburbs will see tariffs increase from an average of $18 824 a month to $47 060 in January and to $94 120 from July.
In the low density suburbs monthly bills will shoot up from an average of $142 698 to $356 685 in January and to $713 370 from July.
These charges do not include water consumption.
Presenting the budget, which was unanimously adopted by the council, Councillor Phil Lamola said it was imperative for residents to realise that unless they carried the cost of service provision, no services could be made available.
“It is only through these sacrifices that a better Bulawayo can be attained,” he said. “The council will endeavour to improve and maintain services while at the same time trying to keep tariffs at a level consistent with macroeconomic trends.”
Though the Ministry of Local Government no longer gives a limit on levels of tariff increases for councils and has encouraged them to charge “economical tariff increases which will enable the clearing away of deficits, repayment of loans and arrears and sustaining the recurrent expenditure”, the council is likely to have a tough time to have its budget approved.
In the budget, that was crafted before the monetary review policy for the third term, the council used an inflation factor of 200 percent as had previously been predicted by the central bank.
The bank has since revised year-end inflation to between 150 and 160 percent, dropping to between 70 and 90 percent by June next year. The Ministry of Local Government had recommended average inflation of 70 percent for next year.
The operations of most councils were crippled this year when the government delayed approving the 2004 budget, with that for Bulawayo only being gazetted in April. It froze tariff increases scheduled for July.
As a result, the council, which had approved a break-even budget of $180 billion for 2004, is likely to have a deficit of $62.4 billion which will come down to $58.5 billion because of a surplus of $3.95 billion that was carried over from last year.
The high tariffs could also result in more defaulters as residents are already failing to cope with the present tariffs. The council was owed $25.4 billion by ratepayers at the end of July and a further $8.4 billion by government departments.
The council, at one time, lamented that ratepayers seemed to have found ways of surviving after it had cut off water supplies to force them to pay up their arrears.
Apparently, water charges contribute 44 percent of the council’s revenue budget, while rates and supplementary charges are a distant second with 24 percent.
The high defaulting rate is already a cause of great concern for the council. Clr Lamola said if more residents were unable to pay for services, the council might find itself in a situation where it offered a service for nothing in return.
This meant that council would have to borrow from banks to pay for services that ratepayers had not paid for and this attracted interest.
He, however, noted that the council was aware that there were some vulnerable groups in the city who needed to be cushioned against the high tariffs. The council had therefore provided safety nets to cover the aged, pensioners and orphans as well as old people’s homes and some schools.
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