City of Cape Town hid its budget details in 39 annexures

Digesting 39 budget detail annexures is almost impossible without AI assistance. But we have to try, or we may miss something.

“In this budget, we have managed to keep increases to water, sanitation, refuse collection and city cleaning to a minimum,” explained City of Cape Town mayor Geordin Hill-Lewis in his address to council. Hill-Lewis is in the final stretch of his current administration and is adjusting the “the city works for you” narrative to become the City of Hope.

From a literary perspective, it’s a nice play on the Cape of Good Hope characterisation carried over from the early years of global exploration and empirical expansion. This was the cape of refuge from the fierce storms and rough seas en route to the riches of Asia.

The valuation illusion

For ratepayers navigating the 2026/27 financial year, the R87.79-billion draft budget tabled on 31 March presents its own rough seas. While the mayor proclaims a record-breaking R40-billion three-year infrastructure investment and claims the “most comprehensive relief for struggling households,” the data tell a more complex story of shifting tax burdens and looming hikes.

The headline is a 10.2% drop in the residential rate-in-the-rand formula, lowering it to 0.006428, with a special condition that the first R500,000 of a property’s value will be rates-free.

That allows the City to crow that around 60% of homes will see a decrease in property rates, or no change at all.

The uncomfortable reality hidden in the annexures is that the 2025 general valuation wipes out much of this perceived relief.

As property values have swollen, the total revenue the City extracts from property rates is actually projected to climb by 7%, yielding an additional R963.5-million for the 2026/27 financial year.

Because the fixed water basic charges are strictly tied to property value bands, many homeowners will be punted into higher fixed-cost brackets simply because their assessed property value went up.

City-wide cleaning’s dirty secret

The mayor’s speech also proudly declares that the new city-wide cleaning tariff will increase by only 3.75%. Digging into the medium-term projections reveals that the citizens are following the mayoral tune towards a cliff:

This tariff is being phased in for 2026/27 with a modest increase. In 2027/28, it is slated for a massive 16.96% hike. By 2028/29, ratepayers will be slammed with an enormous 37.31% increase.

The budget also resurrects the ghosts of the Day Zero 2018 water crisis. Back then, a proposed property-value-based drought charge was scrapped after 66,000 furious public comments.

Instead, the City has now baked the costs into fixed basic water and sanitation charges that ignore actual consumption.

In the 2026 redux, the controversial desalination plants are back on the books permanently – not as emergency levers that were never pulled, but rather as integral additional infrastructure. Budget allocation shows a beefy R292.9-million for Desalination Location 2 (there by Paarden Eiland by all indications) and explicitly notes that future operational costs will be absorbed directly into the water tariff.

The electricity conundrum

On the energy front, the City (and the DA, by political extension) boasts of restricting the Nersa-approved 9.01% Eskom hike down to an average 6.67% increase for its customers.

However, the electricity tariff acts as a Trojan horse for other municipal costs. There’s an unregulated component of the tariff that charges consumers an extra 11.45c per kWh just to fund street lighting. On top of that, a 29.65c per kWh contribution to rates is quietly skimmed from most non-residential energy sales (more on that below).

Direct customers classified as home users (properties valued above R1-million) are hit particularly hard, facing a fixed service charge of R368.96 per month before a single lightbulb is switched on.

The cost of doing business in the City of Hope

While the residential sector wrestles with valuations and tariffs, the commercial and industrial sectors carry a disproportionately heavy load in Cape Town.

Industrial property rates are taxed at a 1:2.35 ratio compared with residential homes. While residential properties pay a rate-in-the-rand of 0.006428, industrial sites sit with 0.015106.

The City is aggressively passing on cost recovery tariffs for disaster management directly to heavy industry – these are green taxes by another name. For 2026/27, Astron Energy will pay an annual tariff of more than R610,000, Rheinmetall Denel Munitions pays roughly R693,063 and Koeberg faces a massive R14.46-million bill.

Industrial waste water is also heavily penalised, carrying a base treatment cost of R5.04 per kilolitre multiplied by a surcharge factor based on the concentration of pollutants.

These costs are also on top of conditions where commercial water tariffs offer no free allocations, starting at R39.56 per kilolitre and ramping up to R68.76 if the City enters emergency water restrictions.

To be fair, the budget does widen the safety net for the city’s poorest residents, shielding them from the brunt of these hikes:

• Registered indigent households will receive their first 10.5 kilolitres of water free. These vulnerable households are also entirely exempt from the fixed basic water and sanitation property charges.
• The upper qualifying limit for pensioners and social grant recipients to receive rates rebates has been raised to a total monthly household income of R27,000.
• Homeless shelters and children’s homes get a free allocation of 0.75kl of water per person per month.

If anything, there is nothing obviously nefarious about the proposed budget. Hill-Lewis has a very talented speech writer who stretched the reality of the economic turmoil very thin with hopeful language.

The budget compilers also deserve a special mention for obfuscating the devilish details across a brutal number of annexures. DM