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Local Government: Municipal Finance Management Act, 2003 (Act No. 56 of 2003)

Chapter 4 : Municipal Budgets

26. Consequences of failure to approve budget before start of budget year


(1) If by the start of the budget year a municipal council has not approved an annual budget or any revenue-raising measures necessary to give effect to the budget, the provincial executive of the relevant province must intervene in the municipality in terms of section 139(4) of the Constitution by taking any appropriate steps to ensure that the budget or those revenue-raising measures are approved, including dissolving the council and—
(a) appointing an administrator until a newly elected council has been declared elected; and
(b) approving a temporary budget or revenue-raising measures to provide for the continued functioning of the municipality.


(2) Sections 34(3) and (4) and 35 of the Municipal Structures Act apply when a provincial executive dissolves a municipal council.


(3) When approving a temporary budget for a municipality in terms of subsection (1)(b), the provincial executive is not bound by any provision relating to the budget process applicable to a municipality in terms of this Act or other legislation. Such a budget must, after the intervention has ended, be replaced by a budget approved by the newly elected council, provided that the provisions of this Chapter relating to annual budgets are substantially complied with in line with any revised time frames approved by the MEC for finance in the province.


(4) Until a budget for the municipality is approved in terms of subsection (1), funds for the requirements of the municipality may, with the approval of the MEC for finance in the province be withdrawn from the municipality's bank accounts in accordance with subsection (5).


(5) Funds withdrawn from a municipality's bank accounts in terms of subsection (4)—
(a) may be used only to defray current and capital expenditure in connection with votes for which funds were appropriated in the approved budget for the previous financial year; and
(b) may not—
(i) during any month, exceed eight per cent of the total amount appropriated in that approved budget for current expenditure, which percentage must be scaled down proportionately if revenue flows are not at least at the same level as the previous financial year; and
(ii) exceed the amount actually available.


(6) The funds provided for in subsection (4) are not additional to funds appropriated for the budget year, and any funds withdrawn in terms of subsection (5) must be regarded as forming part of the funds appropriated in a subsequently approved annual budget for the budget year.