The City of Johannesburg has approved a more than R90 billion adjustment budget for the 2025/2026 financial year, following a week-long delay that raised concerns about the municipality’s financial health and service delivery outlook.
The delay came after council requested additional time from the Gauteng provincial government, citing insufficient time to properly review the budget.
Executive Mayor Dada Morero described the city as “financially resilient,” despite mounting challenges reflected in official documents.
Revenue shortfalls force spending cuts
Council reports indicate that key municipal entities—including City Power and Johannesburg Water—have failed to meet revenue collection targets. As a result, the city has scaled down planned spending.
Budget reductions include:
- R767 million cut from City Power
- R575 million from Johannesburg Water
- R98.5 million from Pikitup
The adjustments are intended to prioritise critical projects before the financial year ends in June.
Rising wage bill raises concerns
A major pressure point in the budget is a R1.4 billion increase in employee-related costs, largely due to the politically facilitated agreement (PFA). The agreement aims to address wage disparities and backpay for municipal workers.
However, council has warned that reallocating funds toward salaries could undermine service delivery.
“The shift from operational expenditure to employee-related costs may negatively impact service delivery in future financial years,” council documents noted.
Growing debt and collection issues
The city has also increased its provision for debt impairment by R1.1 billion, reflecting concerns that a significant portion of billed revenue may not be recovered.
Breakdown of increased impairments includes:
- City Power: +R767.2 million
- Johannesburg Water: +R95.3 million
- Pikitup: +R98.5 million
- City Parks and Zoo: +R94.9 million
Although the mayor pointed to “some improvements” in revenue collection, performance still falls short of budget targets.
Mounting financial pressure
Further compounding the situation, the city had already overspent its budget by approximately R3.9 billion by January 2026.
Meanwhile, long-standing debt owed to the municipality by residents and businesses has ballooned to R69 billion—highlighting persistent structural challenges in revenue collection.
Morero said the city is exploring ways to raise capital, particularly to invest in water and sewer infrastructure, where leaks and maintenance backlogs remain a major concern.
Outlook
While the budget has now been passed, the financial adjustments underscore the difficult balancing act facing Johannesburg: maintaining fiscal stability while ensuring basic service delivery in the face of declining revenues and rising costs.