Staff Reporter
The Free State treasury says the provincial government has made strides in settling outstanding debts with local municipalities over the past two years and is now owing only three of them.
Treasury head of department Godfrey Mahlatsi told The Free Stater that arrears for rates and taxes with most municipalities in the province have been cleared except for Mangaung, Maluti-a-Phofung and Matjhabeng.
“We no longer owe municipalities . . . except for those three,” he said.
Mahlatsi said this after Finance MEC Gadija Brown announced in her 2021/22 provincial budget that a total of R1.419 billion had been allocated to the Department of Public Works and Infrastructure for rates and taxes.
Failure to pay rates and taxes on time by several government departments has been described as a perennial challenge by most municipalities as they rely on those collections to implement other projects and pay their own bills to suppliers.
Mahlatsi said in the last two budgets, most of the money that was not spent by departments was either reallocated to the departments of health, education, social development or public works to pay for the rates and taxes.
He was however quick to point out that the latest allocation was not expected to clear the outstanding amounts, but would relieve the pressure on municipalities.
“The amount that we have allocated does not suffice to pay all the debts that we owe municipalities,” said the HOD.
“However . . . when we go through our budget adjustment processes, we make sure that we prioritise municipalities.”
Local government MEC Thembeni Nxangisa welcomed the allocation of the funds saying municipalities desperately need such cash injections to remain sustainable.
“I think this is a great move . . . It’s going to help the municipalities,” said Nxangisa.
“Municipalities survive on revenue collection. That’s their main source of income,” the MEC added.
“So, if government is paying for services, it will go a long way.
“Government must be a leader in paying for services provided by municipalities.
“Such revenues will help municipalities increase and improve water and electricity supplies, cleaning services and sanitation.”
Revenue collection in most municipalities has declined in recent years due to a drop in economic activity which has left many people without jobs and therefore unable to pay for basic services like water and electricity.
