MUNICIPAL POWERS AND FUNCTIONS

THE CHALLENGE OF UNFUNDED MANDATES

19/20 November 2012

Preface

“The devolution of a new function to local government may occur without it being accompanied by the financial and administrative capacity required to sustain it - what is termed an unfunded mandate.”

•Not an academic dissertation•Rather a practical approach to the phenomenon re•What does it entail?•Why is it a concern? •What to do!

1. INTRODUCTION

1st TENURE OF COUNCILS

• Unfunded Mandates a prominent topic• Old order laws continued to apply• Numerous actions by municipalities*• Other spheres not very active – had to

fund or take-over function• 2003/5 attempts at developing

national policy: Policy for the Assignment of Powers and Functions to the Local Government Sphere

2nd TENURE OF COUNCILS

• Unfunded Mandates less prominent topic

• 2007 DPLG published the Guidelines on Allocation of Additional Powers and Functions to Municipalities

• Old order laws continued to apply• Very little progress in correcting

Unfunded Mandates• Sporadic initiatives by municipalities• Initiatives faded over time• Financial burden increased

3rd TENURE OF COUNCILS

• New politicians and administrators • Oblivious of struggle to correct

Unfunded Mandates • Old order laws continued to apply• Very little progress in correcting

Unfunded Mandates • Initiatives by municipalities faded• Financial burden further increased• No visible progress - 12 years later

WHY FUSS NOW?

• Budgets under tremendous pressure – Swartland example*

• Unfunded Mandates remain patently unlawful

• Scrutiny by overseeing authorities*•Parliamentary Portfolio Committee•A-G: non-compliance rife•Jeopardising clean audits

• LG must pursue solutions or face serious consequences

2. UNFUNDED MANDATES

DEFINITION

• Common view -Functions undertaken by a municipality at its own expense, which fall outside its area of competence

• Not entirely correct - as we will see• Try to provide some perspective

ORIGIN

• Some deny existence • Unfunded Mandates a fabrication • LG a mere implementing agent• Whitepaper on LG* –

Conceived the term Warned against burdening LG Proposed decentralisation of powers

ORIGIN ctd

• ‘The devolution of a new function to local government may occur without it being accompanied by the financial and administrative capacity required to sustain it - what is termed an unfunded mandate’

• ‘Unfunded mandates strain local government's limited resources and, ultimately, result in a lack of delivery’

ORIGIN ctd

• ‘In order to ensure that the combination of decentralisation initiatives by different departments does not overwhelm local government, and that unfunded mandates are avoided, it is proposed that all legislation dealing with the decentralisation or assignment of powers to local government is referred to the local government MinMec for discussion and comment. In addition, provincial government should monitor the extent to which coordination of governmental activities within a municipal area is taking place through the relevant municipality, and report to MinMec in this regard.’

ORIGIN ctd

• ‘The coordinated decentralisation of powers and functions to local government. This will be achieved through: Avoiding unfunded mandates.’

• Parliament’s reaction – introduced sections 9.10 and 10A of the Systems Act

LABELLING MANDATES AS UNFUNDED

• Not all extra-jurisdictional functions are in fact Unfunded Mandates

• Confirmed by s 156 of Constitution and others

• Constitution – offers methods to lawful exercise powers or functions of another sphere –AssignmentDelegationAgency

UNDERFUNDED MANDATES

• Unfunded Mandates - often confused with underfunded mandates

• Municipalities often act as agent for another sphere: agency agreement –

• Requires consensus on financials• Contract to own detriment not

Unfunded Mandate• Examples: • Vehicle licencing/testing • Libraries

GENUINE UNFUNDED MANDATES

• Mostly historical in nature – they have been inherited through old order legislation• Examples: • Museums, • Nature reserves (may differ from province to province)

SELF ADOPTED UNFUNDED MANDATES

•Municipalities have taken upon themselves •Often with encouragement of other spheres of government •Not formally ‘devolved’•Examples: •Sport •Welfare services – early childhood development, street people

UNFUNDED MANDATES DISGUISED AS FUNDED

• Introduced through legislation and other legal instruments

• Purports to assign • No formal assignment processes • Examples:

Disaster management - Part A Schedule 4;

Environment - Part A Schedule 4 - coastal management

• Recently more*

UNFUNDED MANDATES DISGUISED AS FUNDED ctd

Draft National Estuarine Management Protocol‘The identified responsible authority to develop the EMP needs to budget accordingly for the development and implementation of these plans’Sectoral Disaster Risk Management Plan – Forestry and Fisheries ‘Local government is also charged with responsibilities regarding disaster risk reduction and management under Part B of Schedules 4 and 5 of the Constitution.” The role of Local Government extends beyond emergencies and relief efforts. As government institutions, Local Governments are also responsible for promoting riskreduction measures to reduce incidents of disasters’Policy For Small Scale Fisheries‘ …. building capacity and providing training to local fishing communities’

SHARED FUNCTIONS

• Number of matters in Schedules 4 & 5 shared by national/provincial on the one hand and local government on the other Not unlawful Uncertainty about ambit Unnecessary expenditure where

encroachment Legislation or agreement to correct

• Also major impact on finances

Provincial/ National

Provincial Roads (4A)

Provincial Traffic (5A)Road Traffic Regulation (4A)Health Services (4A)Public Transport (4A)Pollution control (4A)Environment (4A)Regional Planning & Dev (4A) Urban & Rural Dev (4A)Provincial Planning (5A)Tourism (4A)

Local

Municipal Roads (5B)Traffic and Parking (5B)

Municipal Health Services (4B)Municipal Public Transport (4B) Air pollution (4B)Municipal Health Services (4B)Municipal Planning (4B)

Local Tourism (4B)

3. UNFUNDED AND UNLAWFULL

DUTY TO ACT LAWFUL

• Powers must be exercised conformably with the requirements of administrative justice or legality

• When a municipality therefore acts outside the ambit of its constitutional conferred powers in pursuance of an Unfunded Mandate it acts unlawful

• Also duty to correct unlawful acts

RULE OF LAW

• The exercise of public power must be authorised by law – see Fedsure-case *

• The discharge of a function outside the municipality’s area of constitutional competence is –

• unconstitutional and• it is most likely that a court of law

would find such conduct to be unlawful

RULE OF LAW ctd

Fedsure Life Assurance Ltd and Others v Greater Johannesburg Transitional Metropolitan Council and Others

“It seems central to the conception of our constitutional order that the Legislature and Executive in every sphere are constrained by the principle that they may exercise no power and perform no function beyond that conferred upon them by law. At least in this sense, then, the principle of legality is implied within the terms of the interim Constitution.”

CONSTITUTIONAL IMPERATIVES

S. 41 supports Rule of Law-•Respect for constitutional status, institutions, powers and functions •May not assume any power or function except those conferred •May not encroach on jurisdiction of government in another sphere -•Fire brigade?•Harbours?

STATUTORY JURISDICTION

Systems Act •A municipality has all the functions and powers conferred by or assigned to it in terms of the Constitution, and must exercise them subject to Chapter 5 of the Municipal Structures Act

4. POWERS & FUNCTIONS

COMPETENCIES

What are the powers and the functions of local government that a municipality may lawfully exercise and perform so as to avert Unfunded Mandates? •Time does not permit a proper discussion•Briefly touch upon some important principles

SCHEDULES 4 AND 5 MATTERS

• Constitution designates specific powers and functions to each sphere of government

• Local Government’s ‘original’ powers are set out in section 156

Executive authorityLegislative Authority

SHARED FUNCTIONS

• See discussion above

• Powers and functions are not divided amongst the government spheres in water tight compartments

ASSIGNMENT

• Constitution permits devolution of powers and functions by means of assignment

• ‘Subsidiarity clause’ – s.156(4) responsibilities allocated to level of

government closest to the people not method to accomplish

assignment a principle that requires adherence

when certain criteria are present

ASSIGNMENT ctd

• Assignment by agreement  to specific municipalities by s. 99

& 126 • Assignment by legislation

to individual municipalities by s. 44(1)(a)(iii) and 104(1)(c)

to municipalities in general by s.156(1)(b)

OTHER POWERS OF LOCAL GOVERNMENT

• Financial and fiscal powers - s. 229• Agency functions - s. 238• Delegated powers - s. 238• Implied or incidental powers* - s.

156(5)

A municipality has the right to exercise any power concerning a matter reasonably necessary for, or incidental to, the effective performance of its functions

OBJECTS OF LOCAL GOVERNMENT

• Not confuse with ‘powers and functions’

• objects are broadly defined• Powers & functions more narrowly or

specifically defined• s. 156 limits s.152 in light of Rule of

Law• s. 156 primary means to achieve

objects and development duties*

5. CONSEQUENCES

LEGAL

• The performance and exercise of these powers and functions are patently unlawful – contrary to Rule of Law

• Risks – Legal challenges

Usurping legislative powers in terms of Unfunded Mandates

Qualified audit report

FINANCIAL

• Budgets under severe pressure - using municipal ratepayers’ money to finance activities of other sphere of government

• Constitutes irregular expenditure• Is a forbidden activity* - see section

164 of the MFMA• Recovery from responsible political

office bearers and officials

DISCIPLINE

Risk of disciplinary action against -•Councillor in supporting a motion in council or its structures that conflicts with legislation – Item 2A of the Systems Act –

A councillor may not vote in favour of or agree to a resolution which is before the council or a committee of the council which conflicts with any legislation applicable to local government.

•Official for financial misconduct as envisaged by the MFMA

6. CORRECTING UNFUNDED MANDATES

• Municipality ensure that it acts lawfully

• Where actions fall foul – must regularise consistent with the Constitution –• assignment, delegation or agency

• Practical issue of governance • Disputes or differences – IGR Act• Underfunded mandates – re-negotiate

terms of agency agreement

THANK YOUKoos Celliers