By Lesedi Sibiya-Diplomatic Insider
The National Treasury, have released the operating and capital budgets of various municipalities which were adopted by the appropriate councils of the respective municipalties.
The budget highlights the expected revenue and expenditure trends within local government over the next three years, under the name the 2025/ 26 Medium Term Revenue and Expenditure Framework (MTREF).
The numbers drawn up within this framework from the annual budgets that municipal managers will be legally required to the National Treasury as well as Provincial Treasuries. The outlined budget revenue for 2025/26 is R675.8 billion, which will be expected to increase to R712.6 billion in 2026/27 and then to R735.5 billion in 2027/28.
Total municpial expenditure is estimated to amount to R698.0 million, as it will increase to R728.3 billion in 2026/27, and R764 billion 2027/26. Municipalties are expected to realise operating deficits on the operating budgets in 2025/26 year as the total operating expenditure increases at higher rate than the revenue projections.
These figures highlight that municiplaties are spending more than they should which sits as a first sign of financial challenges, with the situation hoping to improve. The main costs drivers are seen to be employee related costs and bulk purchases, representing 27.0 per cent and 35.0 per cent of the operating expenditure.
High electricity and water tariff increases have heavily impacted municipalties as lower sales levels have owed to changes in consumption patterns. Captial expenditure increased by 1.9 per cent to R78.9 billion in 2025/26 compared to the original budget for the financial year.
Capital expenditure represented 11.3 per cent of the total expenditure for 2025/26 calendar year and expected to decrease to 10.5 per cent in 2024/25 and a further decrease to 9.8 per cent in 2027/28.
Trading services represent 52.1 per cent of the total captial expenditure of R78.9 billion in 2025/26 with increases to 54.7 per cent 2026/27 and to 56.7 per cent in 2027/28.
Operational repairs and maintenance figures has been framed as part of section 71 in-year reporting. Municipalties have further allocated R38.3 billion to repairs and maintenance of assets in 2025/26. This is expected to increase to R40.6 million in 2026/27 and to R42.7 billion in 2027/28.