The cash-strapped city corporation is plunging into a deeper financial crisis. The state government’s decision to cut its annual maintenance grant and deduct plan fund allocation, coupled with the power tariff hike, could be disastrous for the civic body.
It’s inability to pay pension and retirement benefits to several of its staff has earned the corporation the wrath of the High Court, which has blocked payment of salaries to the secretary and councillors.
“We are now meeting the expense for salary payment and other statutory costs from the additional income collected through intensive tax collection drive.
We are not in a position to spend any extra money besides that,” said deputy mayor B. Bhadra, who is also the chairperson of finance standing committee.
Every month, the local body needs nearly Rs 5.5 crore to pay the salaries of its staff. Next month, it has to raise roughly Rs 8.5 crore for salaries for July and the festival advance for Onam and Ramzan in August.
The hike in power tariff will also deplete the civic body’s coffers as it will have to pay an additional Rs 5 lakh for street-lights.
At present the corporation pays Rs 30 to Rs 35 lakh to the KSEB every month for street lights and another Rs 25 lakh towards general electricity bill.
“We are highly dependent on the grants and plan fund from the state government. Any cut will badly hit development work,” Ms Bhadra said.
She also said the revised tax structure will not help garner handsome additional revenue as there were anomalies in the revised tax payment system.
The local self government department of the state government has decided to cut the annual maintenance grant to the corporation after it failed to pay its water bill to the KWA.
Though the government has announced that it will provide financial assistance for various developmental projects, the funds will be deducted from the annual plan allocation.