The Theunissen-based Masilonyana Local Municipality, which paid workers with food vouchers in June this year, sent a communique to workers with information about the late payment for the month of October 2022.

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In its communique, signed by the Acting Municipal Manager (AMM), Sipho Thomas, workers are advised that the municipality is unable to pay salaries due to municipal debtors not paying for municipal services, and also the lack of income from utility services and other sources of revenue.

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Some parts of the letter shown to OFM News reads that "it is unfortunate to inform you that due to the municipality facing challenges with regard to cash flow, there will be a delay in the payment of salaries for October. The municipality is hopeful that salaries will be paid within three weeks.

"Please note that the municipality is engaging organised labour unions - the South African Municipal Workers Union, Samwu, and the Independent Municipal & Allied Trade Union (Imatu) - regarding this issue and other matters to find long-lasting solutions. The municipality hereby apologises to all for the inconvenience that this may cause."  

The municipal spokesperson, Zongezile Ntjwabule, further tells OFM News that the municipality will seek to enhance all streams of revenue collection. Ntjwabule adds that, among other factors which then hamper the municipality’s ability to pay for services and works, is the high number of indigent people in the area. These people are exempted from paying for services such as water and electricity because of their social standing in the community.

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OFM News previously reported that the MEC for Free State Treasury, Gadija Brown, said National Treasury had issued them with a directive that there will be no more bailouts for broke Free State municipalities.

“Our economy, as we all know, is under huge pressure. We know that it is related to Russia and Ukraine challenges that we are seeing. Inflation has gone up, we find that the debt [in relation] to the Gross Domestic Product (GDP) has gone up and we are looking at a deficit of 15,9% - not only at national level, but also at the level of local government. 

"And what we have encouraged our municipalities to do first and foremost, is to drive the restructuring of the economy so that we can have more people working, paying taxes and rates within the economy, to assist with that budget deficit.

"In terms of salaries, when we looked at the budget at the beginning of the year, there was sufficient equitable share to sustain salaries across the financial year and we also encouraged municipalities to do that. Historically, what we've found, was that there would be a cross-subsidy against the conditional grant and equitable shares and that placed pressure on the equitable share to pay salaries. 

"The National Treasury has given us the guidelines - we do not do bailouts. So, the issue of the bailout to municipalities no longer exists and it has been a huge debate because the people are contributing to that local economy which then brings back the issue of rates and taxes, so you are caught between a rock and a hard place, unfortunately. So what we are trying to do with municipalities is that we are trying to get them to a point where they can go to a bank and get a loan until the salaries process is concluded, based on the current financial year,” Brown said.

Earlier this year, the Cogta spokesperson, Sello Dithebe, told OFM News that municipalities - in their bid to get financial assistance - claim they are experiencing cash flow problems. Dithebe said bailing out these struggling municipalities is not only against the law but is also not sustainable.

“National Treasury has advised against the provincial departments of Finance, Cooperative Governance and Traditional Affairs, or the provincial government, funding the salaries for municipalities. In fact, it would be against the law and is not sustainable. National Treasury, as far back as 2017, came up with an instrument called the Municipal Standard Chart of Accounts (MSCOA), which has about seven segments. One of them is to ensure that there is financial stability in various municipalities,” he added.

OFM News