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Division of Revenue Act, 2021 (Act No. 9 of 2021)

Chapter 5 : Duties and Powers of Municipalities, Provincial Treasuries and National Treasury

28. Duties of municipalities

 

(1)

(a) In addition to the requirements of the Municipal Finance Management Act, the accounting officer of a category C municipality must, within 10 days after this Act takes effect, submit to the National Treasury, the relevant provincial treasury and all category B municipalities within that municipality’s area of jurisdiction, the budget, as tabled in accordance with section 16 of the Municipal Finance Management Act, for the 2021/22 financial year, the 2022/23 financial year and the 2023/24 financial year, except if submitted in terms of any other legislation before the end of the 10-day period.
(b) The budget must indicate all allocations from its equitable share and conditional allocations to be transferred to each category B municipality within the category C municipality’s area of jurisdiction and disclose the criteria for allocating funds between the category B municipalities.

 

(2) A category C municipality that is providing a municipal service must, before implementing any capital project for water, electricity, roads or any other municipal service, consult the category B municipalities within whose area of jurisdiction the project must be implemented, and agree, in writing, which municipality is responsible for the operational and maintenance costs and the collection of user fees.

 

(3) A category C municipality must ensure that it does not duplicate a function currently performed by a category B municipality and must transfer funds for the provision of services, including basic services, to the relevant category B municipality that is providing municipal services, despite the fact that—
(a) the category C municipality retains the function in terms of the Municipal Structures Act; and
(b) a service delivery agreement for the provision of services by the category B municipality on behalf of the category C municipality has not been concluded.

 

(4) A category B municipality which is not authorised to perform a function in terms of the Municipal Structures Act may not extend the scope or type of services that it currently provides, without—
(a) entering into a service delivery agreement with the category C municipality which is authorised to perform the function in terms of the Municipal Structures Act; or
(b) obtaining authorisation to perform the function in terms of the Municipal Structures Act.

 

(5)

(a) A category C municipality and a category B municipality must, before the commencement of a financial year, agree to a payment schedule in respect of the allocations, referred to in subsection (1)(b), to be transferred to the category B municipality in that financial year, and the category C municipality must submit the payment schedule to the National Treasury before the commencement of the financial  year.
(b) A category C municipality must make transfers in accordance with the payment schedule submitted in terms of paragraph (a).

 

(6)

(a) The National Treasury may withhold or stop any allocation to the category C municipality and reallocate the allocation to the relevant category B municipalities if a category C municipality fails to—
(i) make allocations referred to in subsection (1)(b);
(ii) reach an agreement envisaged in subsection (2); or
(iii) submit a payment schedule in accordance with subsection (5)(a).
(b) The following provisions apply to the withholding or stopping of an allocation in accordance with paragraph (a):
(i) Section 216 of the Constitution;
(ii) in the case of withholding an allocation, section 18(4)(a), with the necessary changes; and
(iii) in the case of stopping an allocation, section 19(2)(a), (3), (4) and (5) with the necessary changes.
(c) If an allocation is stopped in terms of this subsection, the National Treasury may, after consultation with the transferring officer, determine that a portion of the allocation that will not be spent, be reallocated to one or more municipalities, on condition that the allocation must be spent by the end of the 2021/22 financial year or the 2022/23 financial year.

 

(7) A municipality must ensure that any allocation made to it in terms of this Act, or by a province or another municipality, that is not reflected in its budget as tabled in accordance with section 16 of the Municipal Finance Management Act, is reflected in its budget to be considered for approval in accordance with section 24 of the Municipal Finance Management Act.