City of Johannesburg (COJ) executive mayor Amos Masondo yesterday presented a spending plan of R18,9-billion, comprising a capital budget of R2,8-billion and an operational budget of R16,1-billion.

Masondo said that over the last four years the COJ had invested over R5,8-billion towards its capital infrastructure.

This year’s budget, however, showed a capital spend of some R2,8-billion, and exceeded the 2004/05 spending plan by R1,7-billion.

The economy of Johannesburg had experienced an annual growth significantly higher than the national average and, in the last five years, had experienced an average growth of 5%, Masondo said.

Further, a study by economic research company Global Insight showed that formal employment in the city, on average, had grown by 2,5% in the last five years.

Masondo said the city expected to raise revenue of R16,2-billion for 2005/06, R16,9-billion and R17,5-billion for 2006/07 and 2007/08 respectively.

The city had also received R695-million from the National Treasury, representing a 37% increase on its equitable share allocation.

The city’s collection level had increased from 87% to 93%.

The COJ's total operating expenditure for 2005/06 was R16,1-billion, an increase of approximately R1-billion or 6,8% over 2004/05 budget.

Masondo said that the city was budgeting for an operating surplus of R87,7-million for 2005/06 financial year, R212,7-million for 2006/07 and R118,7-million for 2007/08 financial year.

The operating expenditure comprised 27,2% for bulk purchases of water and electricity, 26% for salaries and allowances, 10,6% for contracted services, 7% for provision for depreciation and 29,2% for debt-servicing cost and provision for collection levels.

The Utilities, Agencies and Corporatised (UAC) entities made up 54% of the COJ's total budget, with R3,6-billion to City Power; R3,1-billion to Johannesburg Water; Pikitup R621,9-million; Joburg Roads Agency R391-million; City Parks R334,8 million, Metrobus R315-million and the reminder to other service-delivery functions.

The core administration made up 46% of the COJ's total operating budget, spread between finance, portfolio accounts and subsidies to the UACs, metro police, emergency services, housing, corporate services, social development and health.

The capital budget increased by R672-million or 31,5% to R2,8-billion, the highest capital budget for the first time over ten years.

Further, the property rates tariff increase of 4% was kept below the 4,7% estimated inflation.

R200-million additional surplus cash had been budgeted to address power outages.

Regarding the increase in infrastructure spend, Masondo said that it would be financed through, “a combination of borrowing and surplus cash to the tune of R2,1-billion and R649,6-million from the Consolidated Municipal Infrastructure Programme and other provincial and government transfers”.

The capital budget reflected a 31,5% increase from the 2004/05 financial year, which was mainly due to the improved financial position of the CoJ, resulting in more funds being redirected towards accelerating infrastructure development.

The electricity tariffs would rise by 6,2%, water and sanitation by 7,7% and refuse removal will increase by 4,7%.

The initial consultation led to a proposal of 6% increase on assessment rates. However, Masondo reported that, due to improved collection levels, assessment rates had been revised to 4%.

All minor tariffs would increase between 3% and 5%.

A list of priorities and plans had been drawn up, in response to concerns raised during the last year.

Priorities were: public safety and by-law enforcement; housing delivery; integrated transportation and economic growth, which would focus on areas like the inner city and Soweto.

Eleven economic-development projects had identified.

These included the Greater Kliptown Regeneration Development; Gautrain Precincts; Baralink; the Industrial Area Upgrades; large-scale mixed use development in Nasrec; the Soweto Development Initiative; Tolstoy Farm; programmes to fight poverty and promote human development; HIV and Aids prevention and management; inner-city regeneration; the 2010 soccer World Cup.

Masondo also said that the CoJ anticipated spending approximately R1,4 billion for the next four years towards the preparation of 2010 world cup.

In preparation for the world cup, the city had allocated R20-million to the Ellis Park precinct plan, R15-million to the Nasrec project, R18,5-million to the upgrading of the Dobsonville and Orlando stadiums, and R25-million on the ITP flagship projects, located within the 2010 footprint.