Mayor defends revised R87 billion Cape Town budget

Cape Town Mayor Geordin Hill-Lewis defended the city's revised R87.79 billion budget following a Western Cape High Court ruling that forced changes to the municipal financial plan.

The DA majority council adopted the budget during a meeting for implementation starting July 1, despite opposition from smaller parties. The revisions followed a court judgment that required the city to restructure certain financial components.

The council adopted the budget during a virtual special meeting on Monday, 29 June. There are 231 seats in council; the DA holds 135, the ANC 43, the EFF 10, and the Good party 9.

The Western Cape High Court on 30 April declared the city's property value-based fixed charges invalid and unconstitutional, which prompted the budget revisions.

In response to the high court ruling, water and sanitation fixed charges have reverted to meter size. Additionally, the city-wide cleaning charge has moved back into property rates.

The budget includes an expanded rates-free threshold from R450,000 to R620,000 of property value. The income ceiling for pensioner rebates has also been raised to R27,000 a month. Freedom Front Plus councillor Jansen van Vuuren cautioned that the recent general property valuation process threatened to push some beneficiaries and pensioners above eligibility thresholds for electricity rebates, despite the raised income ceiling.

Hill-Lewis stated the city offers the highest rates relief and widest pensioner and indigent benefits among South Africa's five biggest cities. Tariff increases adopted are: property rates a reduction of 2.09 percent in the rate-in-the-rand, water and sanitation 4.5 percent, refuse collection 3.75 percent, and electricity 6.64 percent on average, which is 2.37 percentage points below the Nersa-approved 9.01 percent Eskom increase to municipalities. The city says these represent the lowest percentage increases of any metro in each category for 2026/27.

Hill-Lewis stated that no capital projects were cut and noted that the city's overall capital allocation increased marginally by R50 million. He described the budget as the capstone of his five years in office.

The city projects approximately 130 000 construction-related jobs from capital investment in the current term of office, with 75 percent of infrastructure spending stated to directly benefit lower-income households.

The three-year capital framework totals R40 billion for basic infrastructure. Water and sanitation accounts for R16.7 billion, or 40 percent of total spending, and includes major wastewater works upgrades, a R2 billion pipe-replacement programme described as quadrupled in scope, and expanded water supply sources. Electrical grid upgrades and maintenance are allocated R6 billion, road maintenance and stormwater R3.7 billion alongside R653 million in congestion relief projects. A further R3.2 billion is allocated to the MyCiTi Cape Flats expansion, described as the biggest of its kind in South Africa, R3.3 billion for informal settlement upgrading and state-subsidised housing, R203 million for sports facility upgrades, and R300 million for the Strandfontein Pavilion redevelopment. The budget also includes a record R6.8 billion safety and security allocation for 2026/27.

Several opposition parties objected to the budget on grounds ranging from the public participation process to the DA-controlled council's spending priorities. The ANC described the budget as anti-poor, arguing that tariff increases and municipal charges remained unaffordable for many residents. ANC councillor Daliwonga Badela also highlighted the proposed MyCiTi fare increase of approximately 50 percent, describing it as an excessive burden on poor commuters. The Good Party said the city had become progressively less affordable and challenged the city's claim that 75 percent of its infrastructure budget would be directed to the city's poor. Good party councillor Sandra Dickson also raised concerns about electricity, water and refuse tariff increases above inflation, and criticised what she described as a massive, opaque increase in the free basic services budget, with R1.6 billion classified as "other". Dickson said the city had lowered its housing delivery targets rather than addressing the systemic failure to use available land.

Nasmie Jacobs of the National Coloured Congress told the council that coloured communities had not seen the infrastructure improvements the mayor described. "This is not reflected in our communities where we have daily sewer overflows. The mayor boasts about winter readiness, but we are flooded. The electricity increase is unaffordable," she said. Cheslyn Steenberg of the Patriotic Alliance cited the city's failure to achieve a clean audit, saying the council could not in good conscience support a budget that asks people to pay more when money is being mismanaged. Steenberg also noted that while informal settlements continue to grow, residents in the Cape Flats are still waiting for housing.

ANC councillor Delmaine Cottee noted that residents currently pay R100 for 25 electricity units; after the increases, the same R100 would yield only 22 units. He said most residents need to purchase R100 of electricity every second day, and estimated that 70 percent of pensioners' income is already consumed by electricity costs, with water and sewage charges compounding the hardship further.

EFF councillor Andrew Arnolds also rejected the budget, arguing that it failed to address poverty and inequality. He criticised the city's allocation of R11.4 billion to contracted services, saying the municipality should build internal capacity rather than rely on consultants and contractors.

Hill-Lewis dismissed the objections, saying it was hard to argue with the resources poured into poorer communities. He cited a 30 percent reduction in sewer spills as one measure of delivery, while acknowledging more work remained. He cited the Cape Flats sewer replacement and upgrade project as the largest of its kind in South Africa, and noted a second major sewer upgrade, also in Cape Town, as the country's second largest.

Hill-Lewis also addressed what he described as confusion around the city's unqualified audit report from the Auditor-General, attributing the confusion to opposition parties. He stated that the unqualified audit had nothing to do with the city's finances.

The Auditor-General found that the City of Cape Town had not achieved a clean audit for 2024/25, instead receiving an unqualified audit with findings relating to procurement non-compliance and supply chain management. Several opposition councillors cited this outcome as grounds to withhold support for the budget.

The revised budget affects residents across the Cape Town region through changes to property rates and utility charge structures. These adjustments follow legal challenges regarding how rates are applied to properties within the city.

Frequently asked questions

Why was the Cape Town budget revised?

The Western Cape High Court on 30 April declared the city's property value-based fixed charges invalid and unconstitutional, forcing the city to restructure certain financial components of its budget.

How much will electricity tariffs increase in Cape Town?

Electricity tariffs will increase by 6.64 percent on average, which is 2.37 percentage points below the Nersa-approved 9.01 percent Eskom increase to municipalities.

What is the total capital allocation for basic infrastructure?

The three-year capital framework totals R40 billion for basic infrastructure, with water and sanitation alone receiving R16.7 billion, or 40 percent of total spending.

What rates relief is available to Cape Town homeowners?

The first R620 000 of property value is now rates-free for all residential properties up to R8 million, up from the previous threshold of R450 000.

Did any opposition parties support the budget?

Several opposition parties, including the ANC, EFF, Good Party, and others, objected to the budget on grounds ranging from unaffordable tariff increases and inadequate housing delivery to the city's failure to achieve a clean audit.

Source: ewn.co.za, capetowner.co.za, iol.co.za, novanews.co.za, politicsweb.co.za, smilefm.co.za