Staff-related costs could cripple municipalities

MUNICIPALITIES are spending beyond their means, with mounting affordability pressures and operating deficits in the 2025/26 financial year driven largely by rising “employee-related costs’, according to the National Treasury.

- NICOLA DANIELS

The National Treasury yesterday published the operating and capital budgets of municipalities as adopted by their respective councils for the 2025/26 Medium Term Revenue Expenditure Framework (MTREEF).

The aggregated budgeted revenue for 2025/26 is R675.8 billion. It is expected to increase to R712.6bn in 2026/27, and R753.5bn in 2027/28. While the total municipal expenditure in 2025/26 is estimated to be R698.0bn, increasing to R728.3bn in 2026/27 and R764bn in 2027/28.

“It is notable that municipalities will realise operating deficits on the operating budgets in the 2025/26 financial year as the total operating expenditure increases at a higher rate than the revenue projections. This is an indication that municipalities are spending beyond their means and a first sign of financial challenges.