In the space of six months, the City of Johannesburg has lost a staggering R2.7bn because of slow revenue collection.

The city is owed R38bn in unpaid rates and services. Since the city started its BuyaMthetho campaign last week it has been collecting an average of R220m per day against the R4bn monthly target. They have been disconnecting an average of 1,000 households and companies per day.

Finance MMC Julie Suddaby revealed the R2,7bn loss while responding to criticism of the adjustments budget where cuts across Joburg’s Pikitup have been made.

ANC councillor Loyiso Masuku labelled the adjustments budget “rushed”, adding that it went against all the pillars of uplifting marginalised communities.

Masuku said expenditure had been reduced by R1,1bn, which would have a negative impact on service delivery to the residents of Johannesburg.

“This blatant delay of services is contrary to the seven pillars laid out by the DA. This is a consequence of gross political inexperience and being out of touch with realities of the city.

“This budget is very senseless and a clear disregard of how Covid-19 affected socioeconomic conditions of the people. We do not support the item. We reject a budget that was not well thought of but rather a rush rush rhubulizing budget,” Masuku said.

While the adjustments budget was passed by 139 votes, Suddaby said it was the best the city could do under the conditions the multiparty government found the city’s finances in.

“The rebuild of the Joburg economy is very difficult to explain when a loss of R2.7bn of cash in the bank in a period of six months took place. We inherited an institution that succeeded in losing that enormous amount of money. It troubles me that we are talking losses of billions of rand and we throw the word billions like it’s Smarties... like it doesn’t matter but it does,” Suddaby said.

Suddaby added that on July 1, the city had a cash balance of R6.6bn and midway through the current financial year, it dropped to R3.9bn. In part, she said it was due to a steep decrease in revenue collection and the Covid-19 pandemic, which bore the blame for economic conditions residents found themselves in.

“The current budget was not able to adequately able to address the challenges and need for change. We find ourselves allocating limited resources to serve many in the best possible way and there is always a need to reprioritise both our spend and our collection,” she said.

The 2021/2022 approved operating budget was R74,1bn but on Thursday passed an adjustments budget of R72.8bn, showing a more than R1.1bn reduction. The adjustments capital budget was approved at R7,3bn indicating a reduction of R771m.

Suddaby said the reduction was due to lower than expected revenue collection. Revenue from electricity was down by R975m, while Joburg “grossly” over-spent on bulk electricity purchases by R918m, which was a direct cash outflow from the city.

“Municipalities have not been performing well, causing credit ratings to suffer. Investors cannot trust the South African government to step in when municipalities cannot meet their obligations. We are also doing an investor roadshow in March where, with the backing of the fiscal prudence entered into today, and the commitment to good governance, we hope to motivate more investors to empower our city,” she said.

Also rejecting the budget, EFF councillor Saseka Zitha said it was characterised by hopelessness.

Zitha said the proposals to operating expenditure demonstrated how detached the multiparty government was to ordinary residents.

“With so much refuse collection backlog in the city, why is this government electing to cut budget for Pikitup by almost R13m. We all know the impact Covid-19 has had, a serious government would not cut the budget for City Bus and Tourism because those can play a role in the economic recovery of the city,” Zitha said.

Al-Jamah councillor Imran Moosa expressed concern over budget cuts for the departments of health and social development.

“The recent spell of Covid-19 spread has exacerbated existing social conditions, seriously impacting on our communities,” Moosa said.