Funding conundrum: Local authorities uncertain on county budgets

MORE THAN three months into 2012, and with little concrete information from the Department of the Environment on what will happen if household charge receipts are less than expected, rural local authorities are uncertain how to budget to run their counties for the rest of the year. Officials from a number of them outline their concerns.

Denis McCarthy

WATERFORD COUNTY MANAGER

“We have one of the lowest commercial rates bases in the country – I think we’re in the bottom half dozen – so we are heavily dependent on the Local Government Fund.”

Mr McCarthy said he had been given no indication from the Department of Environment of what action would be taken if the necessary funds weren’t forthcoming from the charge.

“I really don’t know what will happen, we haven’t been told anything – all I know is what I hear in the media.”

The council was “always cautious” with its spending, he said, but could only plan on the basis of its expected allocation from the fund.

Mr Hogan’s talk of rewards for councils which worked the hardest to pull in the cash was a concern, Mr McCarthy said.

“We did a lot of publicity and did as best we could to encourage people to pay, and obviously we will keep working on that, and I would still appeal to local people to pay the charge, but a lot depends on the make-up of the county . . . if you are a more affluent area, obviously it’s easier to get a higher degree of compliance.”

Declan McDonnell

KILKENNY COUNTY COUNCIL FINANCE DEPARTMENT

“Without the Local Government Fund we would never have enough to run the county’s services. It makes up the shortfall in everything from fixing footpaths to planning.”

Almost all the council’s money for recreation and amenity – parks and playgrounds – came from the Local Government Fund, he said.

“There’s a huge difference between ourselves and an urban local authority with a more reliable rates base – we couldn’t manage with a cut in the Local Government Fund because we have nothing to replace it. There is no additional income we can actually raise to balance our budget.”

Changing the system so funds from charges raised locally stay local might encourage more people to pay, but Mr McDonnell said it might never be practical given the State’s population distribution.

“In England you pay your council tax and it’s used locally, and it does make you conscious of how it is used.

“There might be an argument for that in the cities here, but in the rural counties I can’t see how there would be enough money.”

Ger Mullarkey

GALWAY COUNTY COUNCIL HEAD OF FINANCE

For Galway County Council, the choice is stark. “If the fund is cut back we’ll have to look at cutting back services,” Mr Mullarkey said.

“We’ll have to look at things like the library service, if we can maintain the opening hours, repairs of footpaths, repairs of potholes, grants to communities – the things we have discretion over.”

Apart from the Local Government Fund there was very little money coming into the county, he said.

“On the commercial properties we have, there are rates and water charges, there is paid parking in towns . . . but it’s not anywhere near enough.”

He hoped people who hadn’t yet paid would come around to the importance of the charge.

“I hope people will eventually pay. If not, measures will be brought in to pursue people who haven’t paid, but there is no central database of property owners and that doesn’t help matters.”

The council has funds to last until the end of June, he said, and he was asking all departments within the council to hold off on various projects until the funding available from the charge was confirmed. He said he hoped if a critical mass was achieved and a payment rate of 60 to 70 per cent was registered, “moral pressure” would come to bear .

Declan Conlon

OFFALY COUNTY COUNCIL HEAD OF FINANCE

“We are far more dependent on the Local Government Fund than Dublin or Cork City – the bigger urban authorities with the big rates bases.”

Normally when there are changes in funding structure, the council receives a circular from the department. However, Mr Conlon said there had been no notification of what the council should do, or what the Government would do, if income from the charge fell short.

“There’s been no indication of what is to happen. Obviously if there’s a shortfall in what’s collected, the Local Government Fund will be short, but what that will mean for our funding we don’t know.”

Mr Conlon said he would be asking the county manger and the heads of various departments to look at what could be trimmed back. “That’s a process that happens every year. The last number of years it’s always been difficult to balance the budget, but you have to do it.”

However, he said there was scope for optimism, as the rate of payment was encouraging.

“I wouldn’t be pressing any alarm bells yet, this is a new tax, it’s new to everybody and we’re all on a learning curve. If you think about it, 60 odd per cent come out and vote in a general election, and it doesn’t cost [voters] anything, and we’re well on course to achieve that.”

John McKeon

LEITRIM COUNTY COUNCIL FINANCE DEPARTMENT

“The Local Government Fund means an awful lot more to us than somewhere that has urban centres. We have Carrick-on- Shannon – that’s about it for sizeable towns.”

The Non Principal Private Residence charge brings in some money, as do water rates for farmers, but dependency on the Local Government Fund is high.

Leitrim is doubly unfortunate in that it would have a high proportion of householders entitled to waivers, such as those living in ghost estates. Mr McKeon said most of the unfinished estates were so unfinished that there is no one living in them at all.

On the upside, he is expecting a high level of compliance from those who are liable.

“I think we probably have compliance rates higher than those of our neighbouring counties. We have an older population, what with people emigrating or going to Dublin, and people 45 and up would be more compliant.”

At current levels it would not be possible for Leitrim to cope on the charge it collects, but he said it would be preferable if householders could see a relationship between what they paid and what they got. “I don’t think people realise what goes on behind the scenes and all the things that the council provides.”

There was no comfort for Leitrim in Mr Hogan’s promise to reward those councils which pulled out the stops. “How is he going to quantify that; how is he going to know how hard we worked to chase up the charge?”

David O’Connor

FINGAL COUNTY MANAGER

Managers and finance executives in rural local authorities would probably be very envious of David O’Connor’s position. With a strong rates base, he relies on the Local Government Fund for just less than 9 per cent of his budget.

“We are just basically keeping our heads above water, but I don’t want to be too pessimistic – more people will pay before September when the next jump in penalties comes in.”

All local authorities had cut back “to the bone” in recent years, he said. “It’s hard to see how the sector overall could cut back much more; if the money doesn’t come in it could cause serious problems.”

Even if everyone paid rates or a property tax set at a higher rate, it was likely that some form of equalisation would be needed, he added.

“Ever since the abolition of rates in 1978 broke the link between the people and local government, funding of local government has been in decline.”

The valuation process for the property tax was going to present another problem for the Government, he said, given that it took the Valuation Office 12 years to revalue properties in Fingal, South Dublin and Dún Laoghaire-Rathdown.

For Fingal there will be a need to rein in discretionary spending if the charge does not bear fruit, but he said decisions would be toughest for rural local authorities.

“In Galway, for example, there are no towns between Spiddal and the Shannon, so the rates base is minuscule, and people wonder why Galway had no money to invest in water.”