Maintaining a capital spend of about R1-billion a year over the next two to three years is a key strategic objective of the City of Johannesburg, Councillor Kenny Fihla, who heads Johannesburg’s Mayoral Committee on Finance, Strategy and Economic Development, reported in a briefing yesterday.

R1-billion would represent just less than 10% of South Africa’s largest city’s annual budget and a significant improvement on capital expenditure from R309-million in 1998/9 to R295-million in 1999/2000, during the City of Johannesburg’s years of financial crisis, and up to over R1-billion in the years 2001/02 and 2002/03.

Responding to questions about the problem of unspent funds, Fihla stated that in the next year at least 75% of funds allocated to capital projects should actually be spent and that this proportion should increase in future.

He listed the City of Johannesburg’s priority areas as including the following the reduction of crime, the renewal of the inner city, the response to HIV AIDS, employment creation and improved service delivery. He says that the city’s capital projects are shaped by these priorities.

The City of Johannesburg has lunched on Operation Clean Audit Report which aims to “systematically address all concerns” raised in reports by the Auditor General about the sate of the city’s accounts. Problems have included the city’s incomplete asset register, unfounded liabilities and weaknesses in its control environment. It is anticipated that an unqualified audit will allow the city to raise bond finance on improved terms and with greater flexibility than its present financing arrangements.

On the revenue side, the City of Johannesburg has experienced consistent growth over the past two years, driving significantly by sharp increases in revenue raised form Regional Services Council (RSC) levies. A compliance push has seen revenue from RSC levies, which are a tax based on company pay-rolls, increase form about R60-million a month to about R100-million a month.

Roland Hunter, the City of Johannesburg’s Executive Director for Finance, acknowledges that while there were previously moves afoot to do away with RSC levies on the basis that it was regressive and created a disincentive to employment, he did not think that the tax should be abolished without an alternative being put in place. Furthermore, he did not think that it had been shown whether the tax did in fact reduce employment levels.