Unfunded municipal budgets: Councils promise, residents pay dearly

This story has significance for readers across Africa and beyond.

The pitbull came through the gate sounding like a constricted V8 engine. It had no interest in Lee-Roy. It closed on my left leg just below the knee and would not let go, and when the man finally wrestled it off, there were half a dozen puncture wounds around my shin and calf.

He had fetched the keys himself.

That is the part I have never been able to put down. The dog had been lying on that floor the whole time we stood there â sprawled in the open between the man and his kitchen, lifting a hind foot now and then for a lazy scratch.

Not hidden. Not shut in a yard at the back. I had watched it through the burglar bars while he took my twenty cents and went to get the toffee apple. I was barefoot, and I had walked up Greyling Street in the summer heat behind Lee-Roy. Then the man came back with a cluster of keys and unlocked the gate, because that is what you do when a customer has paid.

He looked at the blood as though I had brought it with me. Then he shut the gate and went into the house.

I walked home on melting asphalt. I washed at the tap outside, because I was not permitted to bleed in the house, and tied a grey school sock around my leg. The woman I boarded with sat on the stairs smoking and did not get up. Her mother wanted to know what I had done to provoke the dog â no dog bites you unless you did something. It was agreed between them that I would learn from this.

Nobody went back to Greyling Street. Not that afternoon, not ever. The gate stayed where it was and so did the dog and so did the man, and the next child who came up that road for a toffee apple met exactly what I had met.

I have been thinking about that gate since 24 June, 2026, when the Auditor-General tabled her report on local government for 2024-25. It is the report card of the councils voters will be asked to return or replace on 4 November.

Nobodyâs dog got loose

In 2024-25, 116 of South Africaâs 257 municipalities adopted unfunded budgets, committing R288.17-billion they had no means of raising. Seventy-seven of them had done it in each of the four years of the outgoing councilâs term.

The phrase âunfunded budgetâ does a lot of work to make this sound like weather. It is not weather. Section 18 of the Municipal Finance Management Act permits a council to fund a budget from three sources and no others: revenue it can realistically expect to collect, cash-backed surpluses from prior years, and borrowing for capital only.

Subsection (2) is the one that matters. Revenue projections must be realistic, tested against what the municipality actually collected this year and in previous years.

So the arithmetic sits on the table before the vote, the way the dog lay on the floor before the keys came out. National Treasuryâs Section 71 report for the third quarter of 2024/25 records that municipalities budgeted, in aggregate, for an 85% collection rate and collected 63.6% of what they billed. Among the metros, the gap was wider: 87.9% budgeted against 58.2% collected.

Those are sector-wide figures, not a charge sheet against any particular council. But section 18(2) does not ask about the sector. It asks each municipality a question about itself, and every council already holds the answer: what did we actually collect last year, and the year before that?

A council that has never once collected more than two-thirds of its billing, and adopts a budget premised on far more, has not been unlucky and has not been optimistic.

In the private sector, this conduct has a name. A board that adopted a budget it knew could not be funded, continued incurring obligations against it, and fell years behind its principal suppliers would risk being found to have traded recklessly. Directors could face personal liability, or delinquency proceedings. The law provides for this because a promise to pay, made by people who know the money is not coming, moves the risk on to everyone standing downstream who assumed the promise was real.

The comparison is imperfect, and the imperfection cuts the wrong way for councils. A municipality cannot simply be liquidated like an ordinary company and allowed to disappear. It cannot suspend water while the lawyers argue. Its shareholders cannot sell and leave; they are residents, and they are stuck. That is a reason to hold municipal budgeting to a higher standard than corporate budgeting, not a lower one. Instead, we hold it to almost none.

Who bleeds

Follow it downstream, and it stops being an accounting matter.

In 2024-25, 177 municipalities incurred R36.05-billion in unauthorised expenditure. Ninety-eight spent more than they generated. At year-end, 174 did not hold enough cash to pay their creditors. Sixty-two were in positions severe enough to raise a going-concern question, and 33 of those had been there four years or more.

Then the compounding. A municipality that cannot pay does not merely pay late; it pays more. Some 136 councils failed to pay suppliers on time, and that alone produced 83% of the R6.36-billion in fruitless and wasteful expenditure for the year â money spent as interest and penalties. No pipe, no road, no clinic. Nothing.

By December 2025, municipalities owed creditors R160.8-billion. Eskom reported being owed R110.5-billion, and water boards and the Department of Water and Sanitation R30.7-billion, as GroundUp has set out. One municipality, Matjhabeng, owes a water board more than R9.5-billion.

So a household three months in arrears has its water restricted â enforced by a municipality years in arrears with the very board that supplied it. The household faces a consequence. The council faces a letter.

What did he do to provoke the dog?

The serious objection to everything above takes the shape of that question, and it deserves a serious answer.

Municipalities are not only debtors. Aggregate consumer debt owed to them stood at R467.2-billion at 31 December 2025. Households account for R335.3-billion of it. Organs of state â the same national and provincial departments now issuing instructions â owe R27.6-billion. More than 87% is older than 90 days â the kind of debt that stays on a ledger long after it has stopped being believable.

Some municipalities cannot be funded by any arrangement of competent management: Kai !Garib in the Northern Cape serves roughly 85,000 people and earned under R400-million last year, against debt of more than R1-billion.

All of it is true. None of it is an answer. And the last of them is the least of an answer, because a council that genuinely cannot fund itself has every reason to say so out loud â to table what it can afford and leave the gap visible, where Treasury and the demarcation authorities cannot pretend not to see it.

An unfunded budget does the opposite. It conceals the very structural failure it is later offered as the excuse for. Because an unfunded budget does not collect one additional rand. It recovers no overdue account, bills no defaulter and repairs no meter.

What it does is authorise spending against revenue the council already knows will not come â before a single cent has gone missing. Budgeting on a collection rate your municipality has actually achieved is painful, honest and lawful. Budgeting on one it has never reached is none of the three. And you cannot plead misfortune four years running. At some point, the pattern stops describing a circumstance and starts describing a character.

He will learn

On 7 July, National Treasury withheld R13.5-billion in equitable share transfers from 69 municipalities, invoking section 216(2) of the Constitution. It is the sharpest instrument the state holds over a council, and for three weeks it worked the way such instruments do: it got attention. Twenty municipalities met the conditions and were paid.

Then, on 31 July, the remaining R7.1-billion went out to the other 49 â including 28 that had complied with nothing at all. Enoch Godongwana was careful to say the release did not mean the municipalities had âsatisfied the requirements of the Municipal Finance Management Actâ, and his reasoning for going ahead was sound: holding the money longer would have punished residents rather than councils, which is the trap every such instrument sets. The compliance programme that replaces it runs to 30 November. The next transfer that could be withheld falls in December.

Both of those dates are after 4 November.

The Minister of Cooperative Governance was blunter about what the practice is. Municipalities that do this, Velenkosini Hlabisa said, are âcommitting lies by budgeting with funds they do not haveâ. He is right. But this has been said from podiums for a decade. In 2019/20, 123 municipalities adopted unfunded budgets; Treasury intervened and brought that down to 66. Last year it was 116. Condemnation is not a mechanism.

Before 4 November, you can find out whether your own council adopted a funded budget. The funding assessment sits in the budget documents the municipality is required to publish; Treasuryâs quarterly reports carry the collection and creditor figures; the Auditor-General publishes outcomes for all 257. It may take 20 minutes in a well-run municipality and considerably longer in one that appears determined not to be understood. It requires no accounting qualification.

I spent years in the office of the Auditor-General, and I have a professional bias worth declaring: I believe what gets measured eventually gets managed. But the measuring here is finished. The books are audited, tabled in Parliament and free to read. Seventy-seven councils opened the gate four years running with all of it in plain view.

Something was learnt on Greyling Street that afternoon. I learnt to be afraid of dogs, and I carried it for years. The man with the keys learnt nothing at all, because nothing was ever asked of him â and that, not the dog, is why it was always going to happen again.

We are the only people who can ask. DM

Reporting originally appeared via Daily Maverick. Read the full source for additional context.