Overview

Intergovernmental Foundation

Co-operative governanceSpheres: national, provincial and local

are distinct, independent, and inter-related

Emphasis on co-ordination and support

Chapter 3Chapter 3

Status of municipalitiesDevelopmental dutiesMunicipal by-lawsMunicipal councilsFunctions: Schedules 4 and 5

Chapter 7Chapter 7

Equitable shareNational government regulate transparency,

accountability and effective management of economy

Municipal fiscal powers: rates on property, surcharges on fees for services, other taxes as allowed by national government, “no municipality may impose income tax, vat, general sales tax or custom duties”

Chapter 13Chapter 13

Intergovernmental Foundation

Forums for intergovernmental fiscal relationsBudget Council (Minister of Finance, National

+ Member of Ex Committee, Province + Finance and Fiscal Commission )

Budget Forum ( Same as above + Organised local government + Minister of Local Government)

IGFR Act of 1997IGFR Act of 1997

Mechanism

Equitable shareProvincialLocal

Conditional grantsAgency paymentsWithholding of funds

Division of RevenueDivision of Revenue

Improving National TransfersImproving National Transfers

Rationalising infrastructure grants ensuring sustainability of investments

Rationalising capacity building grants coordinating approach - initially focusing on financial

managementEncouraging municipal restructuring

improving efficiency and maximising benefits to national economic development

Support and build new structure - municipalities

Constitutional Institutions

Established by constitution and Act 99 of 1997

Independent and impartialLocal government has two seats on the

commission

Financial and Fiscal Financial and Fiscal CommissionCommission

Contents

Currently before Parliament

Extend principles of good governance, public accountability, transparency through proper process of consultation and understandable regular reporting

Allow managers to manageProvide councillors the financial information

needed to set policies and prioritiesPromote transparency in planning, budgeting,

revenues, expenditure, accounting, fiscal reforms, etc.

Create an environment for an active municipal bond market

Primary Aims of the BillPrimary Aims of the Bill

Municipal borrowing (5)Financial emergencies (10)Entities and municipalities (8)Budget process (4)Control & usage of revenues (3)Financial reporting (9)Financial responsibilities of officials and financial

misconduct (6 & 12)National and provincial supervision (2 & 11)

Contents of the BillContents of the Bill

Compliments multi jurisdictional service partnerships / public private partnerships / public public partnerships

Enables restructuring of municipalities through functional budgeting and reporting

Prohibits creation of entities for speculation or to avoid regulatory mechanisms

Promotes transparency and accountability

Municipal EntitiesMunicipal Entities

Promotes transparency and citizen involvement

Budget must be balancedFacilitates good financial management and

sound decision-making Minimum standards for budget documents and

in-year reportingAdjustments and virements allowed, but

regulated

Budget ProcessBudget Process

All funds received must be deposited in bank accounts

Any details in cash management including investments addressed in framework prescribed in regulations

(key issues - preservation of capital and minimising risky investments with public funds)

RevenuesRevenues

Must produce financial statements within two months of year end

Must prepare in accordance with generally recognised accounting practice

Entities created by municipalities must submit audited financial statements to council

Financial ReportingFinancial Reporting

ResponsibilitiesResponsibilities

Municipal manager = accounting officerAccounting officer assigned financial

management and reporting responsibilitiesAccounting officer liable to fine or conviction for

“wilfully or in a grossly negligent way” failing to comply with certain sections

Member of Council can be sanctioned for influencing manager to contravene a provision of the Act.

To encourage improved financial management in municipalities

To ensure citizens are informed and councillors have the information necessary to set policy and priorities

To develop an environment for a municipal bond market

To build a strong financial foundation on which municipal services can be improved and extended unserved citizens.

Benefits of this BillBenefits of this Bill

Infrastructure, Capacity, Restructuring & Transformation

Intergovernmental Transfers

Local Government Transformation ProgrammeLocal Government Transformation Programme

Municipal Finance Mgt. Bill

Municipal Systems ActCapacity Building

Systems

Property Rates BillRSC Levy

Own Source Revenue

Fiscal

Structures Act

Demarcation

Structural

White PaperConstitution

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