The South African Local Government Association (Salga) Gauteng calls for a fair, transparent and collaborative intergovernmental process to resolve the decision by the National Treasury to withhold equitable share allocations from six municipalities in the province.

Treasury announced last week that it would withhold equitable share transfers to 69 municipalities across the country.

Municipalities must comply with financial governance requirements, but enforcement measures should not undermine the constitutional mandate of local government nor compromise the delivery of essential services, says Salga Gauteng.

The equitable share remains a critical source of funding, particularly for municipalities facing constrained revenue bases, rising bulk service costs, historical debt burdens and increasing socioeconomic pressures, the organisation adds.

Salga Gauteng is concerned that withholding equitable share allocations may unintentionally deepen the financial challenges these measures seek to address. Many municipalities rely on these allocations to provide basic services, support indigent households, meet operational commitments and honour payment arrangements with suppliers.

Financial sanctions should not create a cycle in which municipalities become less able to address the very compliance shortcomings they are required to resolve.

Salga Gauteng, therefore, urges Treasury to ensure enforcement measures are proportionate, evidence-based and responsive to the circumstances of each municipality, particularly where credible evidence of compliance or corrective action has been submitted.

Salga Gauteng held a meeting on July 10 during which the affected municipalities reported how they had engaged Treasury, submitted representations and, in several instances, provided supporting evidence demonstrating progress or compliance.

The compliance areas identified by Treasury include reducing unauthorised, irregular, fruitless and wasteful expenditure; strengthening consequence management, disciplinary boards and Municipal Public Accounts Committee processes; implementing sustainable payment arrangements with bulk suppliers and institutions such as water boards, Eskom, the South African Revenue Service, the Auditor-General and pension funds; and adopting funded budgets.

These measures are fundamental to sound financial management. Municipalities must continue strengthening internal controls, improving revenue management, maintaining credible records, honouring sustainable repayment agreements and ensuring that oversight structures address unauthorised, irregular, fruitless and wasteful expenditure matters and consequence management without delay, Salga Gauteng says.

Salga Gauteng says it will continue to support affected municipalities by consolidating their submissions, identifying common challenges and escalating unresolved matters through the appropriate political and technical intergovernmental structures.

“Salga Gauteng calls on Treasury to engage directly and urgently with affected municipalities before finalising or continuing decisions to withhold equitable share allocations. Where additional information is required, municipalities should receive clear guidance and a reasonable opportunity to address any outstanding requirements.

“Simultaneously, municipalities must continue taking decisive steps to strengthen financial governance by reducing unauthorised, irregular, fruitless and wasteful expenditure, improving oversight and consequence management, honouring credible payment arrangements, strengthening revenue collection and ensuring that budgets are funded, realistic and aligned to service delivery priorities,” says Salga Gauteng.

Salga Gauteng says it remains committed to supporting municipalities while advancing accountability, financial discipline and service delivery stability.

Compliance and enforcement should strengthen local government, not weaken its ability to fulfil its constitutional responsibilities. Salga calls on all parties to resolve this matter urgently, fairly and collaboratively in the best interests of municipalities and the communities they serve.