Bhubaneswar, Oct. 10: The Bhubaneswar Municipal Corporation is staring at a serious financial crisis with its earnings becoming restricted and expenses mounting.

On an average, the corporation mops up around Rs 84 crore from taxes, and its spendings are in the range of Rs 123 crore. The deficit of Rs 39 crore is managed either through state funds or grants from the Centre under various schemes.

The financial crisis has aggravated further as it is required to pay its staff Rs 23 crore towards arrears and pension benefits following recommendations of the Sixth Pay Commission.

A senior officer of the corporation, who did not want to be named, told The Telegraph: “The extra financial burden of Rs 23 crore will be hard to handle as we continue to struggle with our normal yearly deficit of around Rs 39 crore. We don’t know where the funds for payment of arrears will come from.”

To make matters worse, the Bhubaneswar Municipal Corporation (BMC) will also be required to spend Rs 2 crore extra from this year, on the salary of more than 200 employees who are going to be regularised shortly after working on contract for a long time.

The civic body’s revenue sources, too, are getting increasingly clogged. The corporation has been forced to stop assessment of households for holding tax collection at enhanced rates notified on December 15 last year following a stay by Orissa High Court.

Thus the corporation, which aimed to collect around Rs 30 crore as holding tax this year, will actually end up getting just half that amount.

Much to the corporation’s chagrin, the bill for replacing holding tax with the high-yielding property tax is yet to be introduced in the state Assembly. “If the bill is passed, the corporation can collect up to Rs 120 crore as property tax,” said senior tax consultant Manas Mohapatra, adding that such matters should be pursued sincerely.

The municipal corporation got Rs 49 crore for the last financial year as the entry fee towards compensation for abolition of octroi. However, this amount would have been much more had the government re-assessed the parameters for the calculation of octroi compensation with 1999 as the baseline year. Business in the city has expanded tremendously since then.

A senior BMC official said: “Last year, the Odisha government collected Rs 1,093.28 crore in the form of entry tax. But even by a conservative estimate, the civic body should get at least Rs 100 crore as octroi compensation from this financial year alone.’’

There is also a proposal to augment BMC’s revenue by collecting periphery development fees from real estate developers.

The corporation is supposed to collect 2 per cent of the cost of the multi-storey building projects promoted by developers as periphery development fee while awarding them no objection certificates (NOC).

Only after getting the NOC from the civic body can a builder go for plan approval from the Bhubaneswar Development Authority (BDA). As the NOC collection started only 19 months ago, till now only around Rs 10 crore has been collected. However, BMC officials feel that with the cooperation of developers it could reach Rs 20 crore. “The state government should either make periphery development fee mandatory by passing a law or the civic body should tie up with the BDA to ensure that the money on this is not lost,” said a BMC councillor.