Municipal Timeline

The budget and IDP must be approved by 30 June

Posted on by The CAN Team

The Municipal Finance Management Act (MFMA) establishes strict guidelines to ensure that municipalities prepare, table, and approve their budgets in a timely, transparent, and accountable manner. Sections 16, 24, and 53 collectively mandate that the budget for the upcoming financial year be approved no later than 30 June, ensuring municipalities can operate effectively from the start of the new financial year on 1 July.

MFMA Section 16: Preparing the Annual Budget

Section 16 establishes the foundation for the budgeting process:

  1. Approval Requirement
    • The municipal council must approve the annual budget before the start of the financial year. This ensures the municipality has a clear financial plan to guide operations, service delivery, and resource allocation.
  2. Tabling by the Mayor
    • The mayor must table the draft annual budget at least 90 days before the start of the financial year. This means the draft budget must be presented in council by 31 March.
  3. Multi-Year Planning
    • The municipality can appropriate funds for capital projects spanning up to three years, provided each year’s allocation is separately identified. This facilitates strategic long-term infrastructure investments.

MFMA Section 24: Approving the Annual Budget

Section 24 provides specific deadlines and requirements for budget approval:

  1. Approval Deadline
    • The municipal council must consider the annual budget for approval at least 30 days before the start of the budget year, meaning by 30 June at the latest.
  2. Requirements for Approval
    • The budget approval must include resolutions to:
      • Impose municipal taxes for the budget year.
      • Set tariffs for municipal services (e.g., water, electricity, waste management).
      • Approve measurable performance objectives for revenue collection and expenditure.
      • Make necessary amendments to the Integrated Development Plan (IDP).
      • Revise any budget-related policies to align with the approved budget.
  3. Submission of the Approved Budget
    • Once approved, the accounting officer must submit the budget to both:
      • The National Treasury.
      • The relevant provincial treasury.
        This ensures compliance with broader fiscal frameworks and oversight.

MFMA Section 53: Budget Processes and Implementation

Section 53 emphasizes the role of the mayor in ensuring the budget process is aligned with municipal priorities and implemented effectively:

  1. Political Oversight
    • The mayor must provide political guidance throughout the budget preparation process, ensuring alignment with developmental priorities and financial realities.
  2. Ensuring Budget Approval
    • The mayor must take all reasonable steps to ensure the municipality approves its budget before 30 June, avoiding delays that could disrupt municipal operations.

The Significance of Meeting the 30 June Deadline

  1. Uninterrupted Service Delivery
    Approving the budget before 1 July ensures the municipality has the financial resources and authority to deliver services without delays.
  2. Fiscal Discipline
    Adherence to deadlines ensures fiscal discipline and demonstrates sound financial management practices, building trust with residents and stakeholders.
  3. Alignment with Development Goals
    The budget process ensures the municipality’s spending plans align with its Integrated Development Plan (IDP), delivering on long-term developmental priorities.
  4. Avoiding Provincial or National Intervention
    Failure to meet the deadlines set in Sections 16, 24, and 53 could trigger intervention by provincial or national authorities under Section 139 of the Constitution, which allows for oversight when a municipality fails to fulfill its responsibilities.

Conclusion

Sections 16, 24, and 53 of the MFMA create a robust framework for the timely preparation, approval, and implementation of municipal budgets. By mandating that the budget be approved no later than 30 June, these provisions ensure that municipalities are financially ready to begin the new fiscal year, maintain service delivery, and meet developmental priorities. Adherence to these sections is critical for fostering financial accountability, transparency, and trust in local government institutions.

The CAN Team