Municipal Timeline

Council to consider the annual budget for approval

Posted on by The CAN Team

Explaining Section 24 of the Municipal Finance Management Act (MFMA): The Approval of Annual Budgets

Section 24 of the MFMA details the legal requirements and processes for municipal councils to approve their annual budgets. This section emphasizes the importance of timely decision-making, comprehensive financial planning, and compliance with associated policies. Below is a detailed breakdown of its provisions and significance.

Key Requirements Under Section 24

  1. Timeline for Budget Approval
    • Deadline: The municipal council must consider and approve the annual budget at least 30 days before the start of the budget year.
    • Purpose: This ensures the budget is finalized well before the financial year begins, allowing for smooth municipal operations and uninterrupted service delivery from 1 July.
  2. Approval of the Budget
    • Condition: The budget must be approved before the start of the budget year.
    • Resolution Required: Approval is formalized through a council resolution, as specified in Section 17(3)(a)(i) of the MFMA.
  3. Resolutions to Accompany Budget Approval
    The council must adopt additional resolutions as part of the budget approval process. These include:

    • Imposing municipal taxes: Any municipal taxes to be levied for the budget year must be approved.
    • Setting municipal tariffs: Tariff adjustments for services such as water, electricity, and waste management must be authorized.
    • Approving performance objectives: Measurable targets must be set for revenue from each source and for each expenditure vote to ensure accountability.
    • Amending the Integrated Development Plan (IDP): Any changes required to align the IDP with the budget must be approved.
    • Amending budget-related policies: Policies related to revenue collection, expenditure management, and other financial aspects must be updated as necessary.
  4. Submission of the Approved Budget
    • Responsibility: The accounting officer of the municipality must submit the approved budget to:
      • The National Treasury.
      • The relevant provincial treasury.
    • Purpose: This submission ensures transparency, compliance, and alignment with national and provincial fiscal frameworks.

Importance of Section 24

  1. Ensuring Financial Readiness
    Approving the budget at least 30 days before the financial year ensures municipalities are prepared to implement their financial plans without delay.
  2. Promoting Accountability
    By requiring measurable performance objectives and resolutions for taxes and tariffs, the act holds municipalities accountable for their financial management and service delivery.
  3. Alignment with Development Goals
    Budget approval ensures consistency between the municipality’s financial plan, the Integrated Development Plan (IDP), and other related policies. This alignment is critical for achieving long-term developmental objectives.
  4. Stakeholder Engagement and Transparency
    The requirement for council resolutions and submission to higher treasuries promotes transparency and ensures the budget is subject to oversight by multiple stakeholders, including residents, councilors, and government authorities.
  5. Compliance with National and Provincial Frameworks
    Submitting the budget to the National and Provincial Treasuries ensures alignment with broader fiscal policies and guidelines, fostering coordination across government spheres.

Implications of Non-Compliance

Failure to approve the budget in line with Section 24 can result in:

  • Delays in municipal operations and service delivery.
  • Loss of public trust in the municipality’s governance.
  • Intervention by provincial or national authorities under Section 139 of the Constitution.
  • Financial penalties or withholding of funds by higher treasuries.

Conclusion

Section 24 of the MFMA provides a structured framework for municipal councils to approve their annual budgets. By setting clear deadlines and requiring specific resolutions, the act ensures that municipalities are financially prepared, transparent, and aligned with developmental priorities. Timely budget approval is essential for maintaining public trust, achieving performance objectives, and ensuring effective service delivery.

The CAN Team