CITY AND county councillors across the State are facing the prospect of making millions of euro in cuts to local services as a result of the deficit in payments of the household charge.
Local authority managers began to write to councillors in recent days informing them of the reduction from this month in their Local Government Fund allocation from the Department of the Environment.
Minister for the Environment Phil Hogan has advised county and city managers that he is withholding funds because of the shortfall in revenue from the charge.
The reduction in funding will vary between local authorities but will range from 5 per cent to 15 per cent.
While the financial resilience of the local authority will be taken into consideration, a spokesman for the department said the reduction would be based largely on the rate of payment of the household charge in the county.
Campaigns at a political and official level had been critical of the compliance levels achieved to date he said, but the onus was shifting to individual local authorities to secure the outstanding payments.
The Local Government Fund money was not being “withdrawn” from local authorities but “withheld”, he stressed, and could be clawed back when the final instalment of the fund was made in September, if local authorities improved their collection rates.
While the Minister is clearly putting pressure on local authority managers to up their game in chasing household charge evaders, the responsibility for deciding what services will come under the knife lies with city and county councillors. It is likely to be September before most councils will have an opportunity to discuss the reduction they will have to cope with and what services will be scaled back or eliminated.
Smaller rural local authorities will be hardest-hit by any reduction in their payment from the fund. The Local Government Fund is not shared out equally. Local authorities without much of an income from commercial rates get proportionately far more central government funding.
In 2011, the Local Government Fund accounted for 6.7 per cent of Dublin City Council’s annual gross expenditure; in Leitrim it was 30.7 per cent.
Unfortunately for local authorities most dependent on central government support, the rate of payment of the household charge has been considerably below the national average of about 60 per cent.
Offaly County Council, which has one of the lowest compliance rates at 46.9 per cent, will have to cope with a 12.7 per cent cut in its allocation unless it can significantly up its collection rate. The council’s allocation for 2012 of €12.1 million is to be cut by €1.5 million.
County manager Pat Gallagher has appealed to people to pay up to prevent cuts to services. “The level of the cuts can be reduced if those who have not yet paid the household charge come forward and pay the charge as soon as possible.”
Louth County Council is in a similar position. It had been allocated €9.1 million but just over €1 million will now be withheld, a cut of 12.2 per cent. The council management said it would have to present a revised budget to county councillors in September.
In Longford, compliance of 49 per cent has resulted in a cut of just under 12 per cent, or €1.3 million; Sligo where about 50 per cent paid will also see a €1.3 million cut, a 9.6 per cent reduction in its allocation; while Westmeath, where 54 per cent have paid the charge, will have its fund reduced by 10.35 per cent, or €1.6 million.
Even local authorities with a high income from rates have said they will struggle to cope with the cuts. Fingal County Council relies on the Local Government Fund for less than 9 per cent of its budget. It allocation of €20.4 million is being reduced by €2.2 million or 10.25 per cent. That services will suffer is inevitable, county manager David O’Connor said. “Needless to say, this is extremely bad news for this local authority, with many of our income sources continuing to be under pressure.”
Dublin City Council, the council least reliant on the fund, has one of the higher rates of compliance at 66 per cent, and will sustain a cut of 8.6 per cent or €4.6 million. Even this proportionally less painful cut will mean tough decisions for councillors in September.
Dún Laoghaire-Rathdown County Council has the highest compliance rate in the State, with 79 per cent of households having paid the charge. Consequently, it has the lowest cut in funding at just over 5 per cent. However, manager Owen Keegan said the cut of €1.374 million was “most unwelcome”, given the area’s “stellar performance” in paying up.
Separately, Mr Hogan is seeking to save funds by abolishing a number of town councils under proposals to be brought to Cabinet tomorrow.
Councils cannot be abolished until the next local authority elections in 2014, but the Minister has said there are too many councillors and councils, and he will cut the numbers to save taxpayers’ money. The abolition of town councils will also have an impact on council staff.
HOUSEHOLD CHARGES: MINISTER ACCUSED OF BULLYING
MINISTER FOR the Environment Phil Hogan has been accused of bullying cash-strapped local authorities by withholding funding unless household charge payment rates improve.
Fianna Fáil environment and local government spokesman and Offaly TD Barry Cowen said Mr Hogan was punishing local authorities for his own ineptitude.
“That Minister Hogan would even consider penalising local authorities for the chaos that he created is a disgrace. Not only is it deeply unfair, it will lead to serious funding problems in city and county councils around the country.”
Offaly County Council has one of the lowest compliance rates with the charge, at 46.9 per cent, and is facing a 12.7 per cent cut in its Local Government Fund allocation.
“Minister Hogan’s bullish approach has already caused great confusion and distress to homeowners across the country. Now they are learning that their local services are in the firing line as a result of the mess that the Minister himself made.
Dublin city councillor Cieran Perry (Ind) said the cut of more than €4 million to the council’s budget would be unsustainable.
“Dublin City Council has already cut back on essential services such as flood relief, road safety, senior citizen security and waste management.
“Further cuts to their stretched budgets will only exacerbate this situation and local community facilities will find themselves under threat.”
Fingal county councillor David McGuinness (FF) said both councillors and council managers were being put in an impossible position as they try to balance books and manage services.
“Phil Hogan has decided to roll out this callous new measure just as the Dáil lifts for its summer recess. This is cynical politics in the extreme.”
