2025/26 DRAFT BUDGET TABLED FOR PUBLIC COMMENT: What you need to know
The 20256/26 draft budget was tabled at the Special Council Meeting held on 31 March 2025. Councillors, residents, ward committee members and other stakeholders now have the opportunity to review the proposed budget and provide their comments on the financial year beginning 1 July 2025 and ending 30 June 2026.
Comments can be submitted to cfo@overstrand.gov.za or mm@overstrand.gov.za. The closing date for public comment is on 6 May 2025. The municipality will consider all concerns and feedback before the final budget adoption on 28 May 2025.
Alongside the draft budget, the Draft Integrated Development Plan (IDP) Review and Draft Top Layer Service Delivery and Budget Implementation Plan (SDBIP) for 2025/ also available for public comment until 6 May 2025.
Residents are invited to view these documents at municipal offices and libraries from 2 April 2025 or download them from the Overstrand Municipality’s website at www.overstrand.gov.za (go to Documents, click on Strategic Documents and choose relevant document).
Mayor Rabie stated in her brief overview, that the budgeted revenue for the upcoming year is projected to be R2.015 billion, excluding capital grants.
In terms of expenditure, the budgeted operational costs, which include all service delivery related expenses and non-cash items such as depreciation, total R2.109 billion. This reflects the comprehensive cost of managing and delivering services across the Overstrand.
While the budget shows a projected accounting deficit of R94.5 million, it is important to highlight that this represents an improved year-on-year position. In comparison to the original deficit of R106.9 million for the current financial year, this is a positive step forward, showcasing the municipality’s commitment to reducing deficits through careful financial planning and management.
Additionally, the proposed capital budget stands at R245.8 million. These funds are earmarked for specific, targeted capital projects.
Tariff Increases for 2025/2026
The tariffs for refuse removal and sewerage will each increase by 6%, while the tariff for water will rise by 6.2%. Property rates will increase by 9.7% on the cent in the rand value.
People who buy directly from Eskom will face a 12.74% increase starting from 1 April, while the municipality will implement the increase from 1 July. This means the municipality needs to recover the increase over a nine-month period.
The Mayor said the electricity tariffs are a bit more problematic. The electricity tariff for municipal consumers is expected to increase by 9.96% in 2025/2026, although the final increase still needs to be confirmed by the National Energy Regulator of South Africa (NERSA).
Consumers will have the option to choose the size of their electricity connection (capacity), which will affect their costs. The larger the connection, the higher the capacity charge.
Tariffs are based on the Cost of Supply (CoS), meaning consumers pay for the portion of the network and the kWh they use, reflecting the actual cost of service. The Cost of Supply tariffs and tariff restructuring will be phased in over four years, with the second year of implementation taking place in the 2025/26 financial year. This phase-in may result in different percentage increases for various consumer categories and connection sizes.
Consumers will also have the flexibility to choose the most cost-effective plan based on their individual needs.
Concluding her speech, Mayor Rabie said that providing additional relief to vulnerable groups is close to her heart. She then explained that, apart from the 100% subsidies for qualifying indigent grant recipients, the first 70 kWh of electricity within the tariff block 0-350, 10 kℓ of water per month, and 7 kℓ of water for sewerage are again proposed to be free of charge. She added that the value of R1 575 (excl VAT). Relief is provided to households earning up to four times the SASSA pension to support lower-income families, if indigent application is approved.
MAYOR RABIE’S DRAFT BUDGET SPEECH, IS PUBLISHED BELOW:
A The proposed budget for the 2025/2026 financial year:
- The budgeted revenue excluding capital grants received, amounts to R2,015 billion.
- The budgeted operational expenditure inclusive of all costs, amounts to R2,109 billion, this includes non-cash items like depreciation.
Hence a budgeted accounting deficit of R94,5m is reflected, representing an improved year-on-year position, in view of the original approved budget of R106,9m for the current period (2024/2025).
- The Capital budget amounts to R245,8m. It is to be used for very specific Capital projects.
- Projected Revenue per functional classification, including capital grants and overheads are:
Governance and administration R682,2m
Community and Public Safety R193,8m
Economic and Environmental services R27,9m
Trading services R1,345 billion
Trading services include electricity/energy; water management, waste water management, and waste management.
TOTAL REVENUE (Including capital grants) R2,249 billion
- Projected Operational Expenditure per functional classification including overheads, are:
Governance and administration R363,3m
Community and Public Safety R370,8m
Economic & Environmental Services R241m
Trading services R1,259 billion
Other Services R6,9m
TOTAL OPEX EXPENDITURE R2,242 billion (with a nett surplus of R7,08m, again, representing an improved year-on-year position, in view of the original budgeted nett deficit of R41,4m for the current period (2024/2025 )
2025/2026 Draft MTREF Budget
The draft MTREF draft budget for 2025/26, provides for tariffs increases for the respective municipal services as follows –
Property Rates 9.7% (% increase on the cent in the Rand rate)
Water 6,2%
Sewerage 6%
Refuse Removal 6%
Electricity tariffs, as following:
The draft electricity tariff increase recommended for municipal consumers of the municipality, is in accordance with electricity consumer categories, as introduced in 2024/2025 already, offers a capacity charge, for the consumer to determine the level of services required, directly in relation to the price structure.
The Cost of Services (CoS) electricity tariff structure is based on the National Energy Regulators required tariff structure for municipalities. The national annual increase for municipalities to implement for 2025/2026, is estimated to increase by 9.96%. The National Energy Regulator of South Africa (NERSA) still has to issue a final determination, but the final increase per category consumer is to be considered in view of the recommended CoS tariffs.
This increase should be determined in combination with the capacity charge tariff applicable to the consumer, together with the electricity unit costs (kWh) consumed.
An important principle of the CoS tariffs is the option for individual consumers to migrate to, or to choose the most cost effective capacity charge tariff, allowing consumers to manage this portion of electricity costs, as well as consumption levels.
Improved Additional relief to vulnerable groups
The municipality furthermore now also considered with this draft budget, improving on the provision of additional relief in line with the municipality’s focus to render support to vulnerable groups –
Owners of residential properties with a total municipal valuation below R300 000 (Three hundred thousand Rand), to be increased to R350 000 (Three hundered and fifty thousand Rand). This will in effect mean that no property rates will be payable on properties with a total municipal valuation up to R350 000 (Three hundred and fifty thousand Rand).
Registered indigents are granted the following subsidies:
- 100% of the basic levy and capacity charge – 30Amp for electricity for one service point per month.
- 100% of the basic levy for water for one service point per month;
- 100% of the basic levy for sewage for one service point per month;
- 100% of 1 X vacuum tanker service after hours, per annum;
- 100% of the basic levy for refuse removal for one service point per month;
- The first 70 kWh in the tariff block 0-350 of electricity per month shall be free of charge;
- 10 kℓ of water;
- 7 kℓ of water consumption for sewerage; and
- 84 in regard of Infrastructure Levy.
in the instance that they qualify for this indigent benefit.
Service Rendering funded from Property Rates
Revenue from Property Rates amounts to R383,97m, however taking into account the cost of rates related services rendered to communities across the Overstrand, is exceeding the revenue received. For example, services related to Baboon Management is funded by the municipality, without any contribution from other spheres.
In conclusion
Council provides relief to lower income households to the extent that it can be afforded by the municipality at an income ceiling of 4 (four) times SASSA pension.
