Budget reviews for local governments


  • Metro News
  • Friday, 12 Jun 2020

MPS lost more than RM500,000 in revenue from waiver of rental for council-owned stalls in view of Covid-19 outbreak.

THE Covid-19 pandemic has left its indelible mark on every aspect of life.

As the country’s economy largely came to a halt during the movement control order (MCO) put in place to flatten the curve and break the chain of infection, a large portion of the population was left without income and revenue.

In turn, the government and private sector alike helped out in numerous ways, including reducing property rentals or waiving the payments altogether.

For local councils, the upshot of that is less revenue and that means they have to revise their budgets accordingly.

StarMetro takes a look at the situation in the municipalities and cities in the Klang Valley.

SHAH ALAM

The city council, MBSA, is expecting a loss in revenue this year.

Its corporate communications head Shahrin Ahmad said all departments had been asked to look through their budgets again for the year.

“We will see what needs to be done after the reviews are completed, ” he said.MBSA will make a decision after all departments have looked through their budget again. - Shahrin AhmadMBSA will make a decision after all departments have looked through their budget again. - Shahrin Ahmad

When contacted, Selangor Local Government, Public Transport and New Village Development Committee chairman Ng Sze Han said the revenue and income for both the state government and local councils this year were expected to be lower.

“The movement control order will definitely have a big impact on the overall budget, so our revenue is expected to be lower this year.”

He said local councils and even the state government had to bear unplanned costs, such as rental fee waivers, equipment for disinfection exercises and protective equipment for its frontliners.

“All these costs were not budgeted for the year but had to be spent nonetheless.

“In light of this, all local councils will have to review their budgets and spend wisely, ” he said.

KLANG

The municipal council (MPK) is reviewing its budget for this year, with all its departments facing substantial cuts.All departments and units have to reduce their budget by 30%. - Dr Ahmad Fadzli  Ahmad TajudinAll departments and units have to reduce their budget by 30%. - Dr Ahmad Fadzli Ahmad Tajudin

Council president Dr Ahmad Fadzli Ahmad Tajuddin said the budget cuts would impact all 21 departments and units, including his office.

“Our income has reduced due to the impact of Covid-19 and movement control order (MCO) that shuttered businesses.

“Uncertainties abound but we need to move to a gradual state of restart with cautious steps.

“And it is imperative to prioritise expenditure within available resources.”

Ahmad Fadzli said MPK’s immediate plan was to have each department and unit reduce their budget by 30% across the board on non-committed expenses.

“We will defer all big purchases. Those involve office equipment such as new computers, machinery, vehicles for field work and stationery in bulk, ” he said.

Even with its initial projected revenue, the original 2020 budget would have a deficit of RM32.3mil as MPK had approved RM246.7mil for this year.

The amount to be cut collectively following the budget review is an estimated RM83mil.

The council president said department heads who could not meet the 30% target would have to give justification.

In view of the MCO, MPK has waived the fines for late payment of assessment fee, which is RM20, and exemption of rent for council buildings.

Based on the sums from previous years, the council will be forgoing more than RM1.3mil in the assessment arrears penalty.

“The rent exemption totals RM701,445, ” said Ahmad Fadzli.

“We also spent RM426,876 to help the homeless, which included giving food, shelter, face mask and hand sanitiser, and also reached out to the underprivileged in several neighbourhoods through councillors.”

He disclosed that MPK was supposed to get RM90.5mil in assessment for the first half of the year but had only received RM73.9mil so far, while the council managed to collect only RM10.2mil of the outstanding arrears totalling RM37.9mil.

“Councillors had requested to upgrade small parks in their zones but this now would have to be reviewed.

“I understand that RM1mil is required for each zone but we will need to see the proposals in detail and note the importance of those projects in current times.

“For the present moment, we have to take a conservative approach, ” he added.

It is learnt that some of MPK’s development projects amounting to RM47.9mil may be deferred as well.

Ahmad Fadzli said the Covid-19 outbreak had dramatically amplified the uncertainties for small-time traders.

“Our vision is to help reshape small businesses by bringing them onto the council’s digital platform, Klang i-Plaza, to market their products.”

On basic municipal services, he gave assurance that rubbish would be picked up, drains cleaned and grass cut according to schedule.

He said the targeted budget cuts were to ensure sufficient allocation for the essential services.

SELAYANG

Selayang Municipal Council (MPS) saw a loss of more than RM1mil in revenue in the month of April, said its president Shamsul Shahril Badzila Mohd Noor.

“The state government announced that two payments would be waived, which are the RM20 late assessment penalty and rental for council-owned stalls.

“This meant we could not collect RM900,000 and RM521,902, respectively.

“We understand that the operators themselves cannot open shop and cannot work so they do not have any income for the month, ” he said of the 1,833 stall operators in the municipality who were exempted from rentals for April.

“For May, we know that there are also quite a few who still cannot operate and so we may offer a discount on the rental fees, ” he added.

Despite the losses in revenue, Shamsul said MPS’ operations functioned as normal and cost-cutting measures were not needed yet.

However, he said the council would apply for funds from the state government to be used for infrastructure projects like road works and other repairs.

“I have sent the letter to the state and I hope our request will be approved, ” he added.

SUBANG JAYA

Community leaders do not think that the lack of rental collection will affect Subang Jaya Municipal Council’s (MPSJ) revenue in a significant way.

USJ 16 Residents Association secretary Edward Kor said, “In my opinion, the collections from rental of halls and other council facilities only contribute a low percentage of their overall yearly revenue.

“The council has many avenues to increase the collections.

“I doubt that the lack of such rent collection over the last two months has a huge impact on their revenue.

Loss of rental collection from public facilities is only a temporary setback for MPSJ.Datuk Samson Maman.Loss of rental collection from public facilities is only a temporary setback for MPSJ.Datuk Samson Maman.

“And as ratepayers, residents expect the local council to still perform their duties diligently, ” he added.

SS17 Rukun Tetangga chairman AB Naicker shared similar sentiments.

“How much are the rentals and summonses contributing to MPSJ’s overall budget?

“I don’t think the MCO and lack of rent collection will make a major difference.”

He said a large slice of council revenue was assessment taxes.

“There had been talk of increasing assessment before the MCO, ” he added.

PJS 9 Rukun Tetangga deputy chairman Mohd Noor Ahmad offered a different perspective, saying that maintenance of the public halls and facilities was not cheap.MBSA will make a decision after all departments have looked through their budget again. - Shahrin AhmadMBSA will make a decision after all departments have looked through their budget again. - Shahrin Ahmad

“So if there are no rentals for quite sometime, it is a cause for concern.”

USJ 13 Rukun Tetangga chairman and Zone 3 Residents Committee treasurer Kelvin Chew said, “This is the reality that everybody is facing due to the suspension of most activities during the MCO.”

SS15 Ad Hoc Business Committee representative Datuk Samson Maman said the committee had requested that MPSJ waive the rental fee for the reserved parking bays in front of the shoplots and the council had agreed for the two months of MCO.

“That is RM350 a lot per month.

“Also, many licences had expired and were renewed without compound, ” he pointed out.

He noted that councils with a diversified income base were better managed.

“Loss of rental income is only a temporary setback as postponed events like weddings still need to be held in the council halls. So there is no major loss of income, just a temporary deferment.”

Samson said waiving daily parking fees, extending expired business licences and ceasing compounds were short-term 60-day measures that councils like MPSJ could afford although the MCO severely dented their income from rental of halls and facilities as well as licensing activities.

“We appreciate the efforts of those councils that are pro-active during the restriction period. But we are not out of the woods yet.

“Working together and communications are the keys to community sustainability in difficult times and it breeds less animosity.”

According to MPSJ councillor Ken Chia, who is a member of the council’s infrastructure committee, MPSJ will have a special meeting soon to discuss the budget.

MPSJ could not be reached for comment.

KUALA LUMPUR

For the country’s capital city, an estimated RM92mil had been allocated to assist the people during this Covid-19 outbreak.

A Kuala Lumpur City Hall (DBKL) spokesman said the amount was an additional sum on top of the original DBKL budget announced in December last year.

“The supplementary aid is just a rough estimate to-date.

“There may still be changes to it given that the Covid-19 situation is ongoing.

“The allocation will be used to assist hawkers and petty traders, residents of public housing, the homeless as well as the frontliners, ” he said.

According to DBKL’s 2020 budget, the total expected expenditure is RM2.29bil while DBKL is expected to collect RM2.52bil in revenue including RM1.24bil (49.1%) from assessment tax.

“There will not be any budget cuts from the original budget but our revenue is definitely affected.

“We do not have the final statistics and figures yet since it is an ongoing pandemic, ” said the spokesman.

The aid given by DBKL includes a one-off RM500 incentive to licensed traders in Kuala Lumpur as well as rent exemption for six months from March to August for all residents of its People’s Housing Projects (PPR) and the National Economic Action Council (PPR-MTEN) housing projects.

Article type: metered
User Type: anonymous web
User Status:
Campaign ID: 18
Cxense type: free
User access status: 3

   

Did you find this article insightful?

Yes
No

Across the site