KMC finally makes 2023-24 budget details available to public

The Karachi Metropolitan Corporation (KMC) has finally made the details of its 2023-24 budget of Rs38.198 billion, which was passed on June 14, available to the public. And the budget documents clearly show the revenue generation constraints the KMC faces.

This is because the KMC reduced its budget estimates in the previous financial year by a whopping Rs8.49 billion due to its outstanding issues with the institutions under the control of the provincial government, such as the Sindh Building Control Authority and the excise & taxation (E&T) department.

On August 24 this correspondent filed a request with Karachi Mayor Murtaza Wahab to release the budget documents to the public. Within a week the budget documents were published on the KMC’s website, and the mayor also sent the relevant webpage address to this correspondent.

A controversy was caused after the annual budget was passed on June 14 in abject silence by the then KMC administrator Dr Saifur Rehman through a resolution.

Even after Wahab took the oath of office on June 19, and later presided over a session of the City Council, the media and the council’s opposition members had no access to the budget documents, which were supposed to be in the public domain since the budget was passed.

Budget details

The KMC has allocated Rs2.537 billion for the ongoing road infrastructure projects, Rs217.49 million for municipal services and Rs50.83 million for new road infrastructure projects.

For health a budget of Rs220.88 million has been allocated, for culture & tourism Rs186.845 million, for parks development Rs447.87 million and for information technology Rs83.855 million.

For new development projects the culture & tourism department has Rs29.43 million and the parks department has Rs26.75 million, while the health, municipal and IT departments have no new development projects.

Revenue estimates

The KMC expects to receive Rs4.5 billion from the Sindh government under the head of matching grants, which is in lieu of the octroi & zila tax. The provincial government issues this grant after receiving its share in the general sales tax from the federal government.

The KMC also expects to receive Rs7.15 billion from the Sindh government as a special grant-in-aid. The provincial government issues this grant specifically for paying salaries and pensions. The municipal body is also likely to receive Rs4.2 billion as a bailout package to clear pensioners’ dues.

The KMC generates income through various sources as defined in the Sindh Local Government Act (SLGA), 2013. These sources include fees, charges, taxes, rents, tolls and other recoveries made by the municipal body’s different departments.

The KMC expects to receive Rs910.6 million in revenue from its lands, Rs290.6 million from the estate department, Rs276.2 million from the Orangi project director, Rs175 million from the katchi abadis department, Rs140.1 million from its charged parking department and Rs136.55 million from the enforcement & anti-encroachment department.

From the culture & sports department the KMC expects to receive Rs55 million, from the Karachi Zoo and Safari Park Rs125 million and Rs55 million respectively, and from the engineering department Rs140 million.

Under the head of the municipal utility charges & tax, the KMC expects to receive Rs2 billion and from advertisements it expects to earn Rs5 million.

The Sindh government provides funds to the KMC on account of the district annual development programme. These funds are allocated for development projects and schemes within the jurisdiction of the Karachi district. Under this head the municipal body expects to receive Rs5 billion.

The World Bank provides funds to the KMC for various mega projects through its Competitive, Liveable & Inclusive City of Karachi programme. These funds are aimed at improving the liveability and inclusiveness of the city. Under this head the municipal body expects to receive Rs4.046 billion.

The KMC’s dues against K-Electric and the Karachi Port Trust are estimated at Rs1.85 billion and Rs100 million respectively. And under the head of transfer of income on account of the entertainment tax from the Sindh government, the KMC expects to receive Rs2 billion.

In Schedule V Part-1 of the SLGA, it is clearly mentioned that the entertainment tax is required to be collected by the KMC. However, this tax is still being collected by the provincial government’s E&T department.

A new revenue head of entertainment tax was shown in the budget estimates for 2022-2023, with an expected revenue of Rs200 million, but the E&T department did not pass on this revenue to the KMC, which then nullified the estimates in its revised budget.

However, this time round the KMC has again earmarked Rs200 million in the budget estimates for 2023-2024 “with the hope that the provincial government will realise the ground reality and will direct the excise & taxation department to devolve the collection in the treasury of the KMC in accordance with the provision of rules in the SLGA 2013”.

The KMC also expects to receive Rs50 million from the SBCA under the head of transfer of income from the SBCA. Schedule V shows that the KMC is supposed to collect the fee on base transceiver station (BTS) towers installed on different buildings, but the SBCA collects it, and the issue persists between the two organisations.

Revised estimates

The estimated budget targets for 2022-2023 show a sum of Rs32.2 billion, which was later revised and reduced to Rs23.715233 billion. The reduction was primarily due to the unresolved or stuck recovery heads from the KMC’s own resources.

The budget documents show these issues to be outstanding dues from entities such as KE and Saddar’s Shahabuddin Market, and the non-finalisation of the KMC’s disputes with other departments and the provincial government.

The unresolved matters and disputes between the KMC and other entities have resulted in a decrease in the projected revenue, leading to the revised estimates being lower than initially anticipated.

The land commercialisation fee on the KMC’s major roads, the fee on BTS towers, the licence fee on milch animals, and the toll tax from the link road between the National Highway and the Super Highway are the important revenue recovery heads under which the KMC could not earn any of its legal revenues.