Matlosana’s Unfunded Budget: Pay More for Less!

The City of Matlosana council voted to approve its 2026/27 budget despite the municipality’s own Mayoral Committee acknowledging it has an unfunded budget position — the 3rd year in a row the municipality has done so. Residents in the North West municipality pay property rates nearly 6 times higher than Cape Town homeowners for a municipality under provincial administration.

The City of Matlosana in the North West has approved its 2026/27 budget, with the ANC, EFF and PA voting in favour and the Democratic Alliance voting against. The DA characterised the budget as unfunded — a designation confirmed by the municipality’s own Mayoral Committee, which stated in its Special Meeting minutes of 17 June 2026 that “a credible Funding Plan for 2026/2027 be reviewed with the assistance of the FRP team and Provincial Treasury to address the unfunded budget position.”

Local newspaper Lentswe reported this as the 3rd consecutive year the council has passed an unfunded budget. The pattern is significant given that the municipality has been operating under a legally binding Financial Recovery Plan, with a Provincial Executive Representative deployed inside the municipality by the North West provincial government.

What an Unfunded Budget Means

Section 18 of the Municipal Finance Management Act (MFMA) is unambiguous: a municipality’s budget must be funded, meaning projected revenue must cover projected expenditure. An unfunded budget is not merely a budget under financial pressure — it is one where a council has formally approved spending it does not have the revenue to support. The law prohibits it.

The municipality’s own 2026/27 budget documentation acknowledges that the Auditor-General has raised the going concern matter, reflecting doubt about the municipality’s financial sustainability. The 2025/26 financial year ended with a projected cash shortfall of R3.809 billion according to the municipality’s own funding measurement tables.

The Cost to Residents

From 1 July 2026, a Matlosana property owner with a home valued at R1 million will pay R1 371.16 per month in property rates. By comparison, the same property in Sandton attracts rates of R440.41 per month, and in Cape Town R235.65 per month. Matlosana residents are paying nearly 6 times more than Cape Town homeowners for a municipality the Auditor-General has raised sustainability concerns about.

The DA has argued that tariffs at this level push businesses out of the area and limit economic growth, compounding the impact on residents already dealing with deteriorating service delivery.

A Municipality Under Administration

The budget was approved under extraordinary circumstances. In February 2026, a High Court ruling blocked the council from reinstating its corruption-accused Chief Financial Officer. National government subsequently invoked Section 139(1)(b) of the Constitution, stripping the Matlosana council of its executive powers. By April 2026, a Provincial Executive Representative was formally deployed under a Financial Recovery Plan.

The municipality’s own 2026/27 Budget Management Policy states that the municipality “shall not budget for a deficit” and that revenue projections must be realistic based on actual collection levels. The municipality has been operating on an assumed collection rate of 70%, meaning it already knows 30 cents of every rand billed will not be collected.

A Wider Pattern

Matlosana is not alone. In the Eastern Cape, the DA has formally asked National Treasury to reject the Makana Municipality’s 2026/27 budget on identical grounds. National Treasury’s MFMA Circular 132, issued in December 2025, noted that it was “concerned by the many unfunded budgets adopted by municipalities” and that municipal funding plans were “not realistic or credible.”

National Treasury has the authority under Section 18 of the MFMA to reject a non-compliant budget. It also has the power to withhold equitable share allocations from municipalities under Section 139(5) administration that fail to comply with their Financial Recovery Plans. Whether those mechanisms will be applied in Matlosana’s case remains to be seen.

The 2026 local government elections are expected between November 2026 and January 2027. The Matlosana budget will come into effect on 1 July 2026.

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Riaan Roux is the host of The Riaan Roux Show, an independent South African current affairs channel. Don’t just know what’s happening — understand what it means.