INLSA
Municipal billing systems are in such a mess that the national government is hiring private contractors to figure out whether local government is overcharging national and provincial departments for state properties. Picture: Timothy Bernard
Municipal billing systems are in such a mess that the national government is hiring private contractors to figure out whether local government is overcharging national and provincial departments for state properties.
The national Department of Public Works – the custodian of most state-owned properties – is trying to unscramble years of municipal bills for rates and services on those buildings, which house various government entities.
“Recently, National Treasury requested that all municipalities submit invoices they believe that provincial and national departments of public works still owe on property rates,” the department said in a document outlining the problem.
“Some municipalities submitted invoices to the value of R443 913 723, which need to be verified.”
That’s the rates bill. The document does not reveal the size of the services bill being claimed.
“It is against this background that a service provider is required to determine whether the amount claimed by the affected municipalities is correct or not,” said the document.
The Public Works document is an acknowledgement of the huge billing crisis in municipalities. This is a problem that residents in the City of Joburg have struggled with for years.
The Joburg problems are so bad that this month the city’s management and the Johannesburg Property Owners and Managers Association issued a joint statement following a court action by the property owners. It acknowledged that while the council is entitled to disconnect services due to non-payment, such disconnections “may only take place in accordance with applicable procedures”, including issuing correct bills, offering reasonable opportunities to pay, and giving notice of disconnections.
Public Works ignored requests for comment on the national attempts to unravel the billing problems, but the department’s document makes it clear that the problem has been going on for years.
“During 2004/5 financial year, National Treasury made budget available to the Department of Public Works to clear all outstanding property rates arrears,” the document reads.
“Some municipalities never came forward and others were paid the amount claimed. However, due to the challenges other municipalities are experiencing with their billing systems, it is assumed that there might be some payments which were never allocated to the correct accounts.”
Some municipalities are still claiming for property rates arrears.
The problem was complicated by the handover of responsibility for property payments from national to provincial level about three years ago.
A task team involving the National Treasury and the Department of Co-operative Governance and Traditional Affairs was set up, leading to the Treasury’s call for invoices from the municipalities.
Public Works has advertised the contract, and wants the work done within three months of a contractor’s appointment.
The work will include verifying invoices from municipalities, checking to see if any payments were made, reconciling charges with payments, calculating interest payments, checking for overcharging, separating rates charges from service charges, and checking duplicate payments.
The department seems unsure about whether the state owns some of the properties for which it is getting accounts, as the work also includes “verification of ownership on the properties billed”.
The contractor must also come up with an “acceptable model for the leasing portfolio, including solutions to reduce the operating costs”.
In 2008 the national department moved responsibility for paying the municipal bills to the provinces, and set up the devolution of a property rates grant to fund this.
In May this year, the Gauteng Department of Infrastructure Development (DID) said in a presentation to a parliamentary committee that the national department had devolved 8 279 properties to the province, excluding residential properties.
DID said the total paid to Gauteng municipalities for 2010/11 was R217m, which was less than the amount budgeted. DID said the municipalities failed to submit bills, sent incorrect bills, valued properties wrongly, sent bills for properties which DID wasn’t aware it owned, and did not send bills for state-owned residential properties.
In a presentation to the same May meeting, the National Treasury said Gauteng and KwaZulu-Natal were the two biggest contributors to poor expenditure of the devolution of property rates grant.
The Treasury’s statement of municipal accounts for the quarter ended September 30 notes that government departments owe Gauteng municipalities R870m. Gauteng’s gazetted accounts show the government debt to the province’s municipalities at more than R1 billion. -The Star
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Billing: By all accounts, it’s a mess