Sligo may need €10m State injection

THOSE WHO refuse to pay local taxes should not receive State grants, according to independent consultants. They have also called for a State injection of €10 million to counter the growing “financial crisis” at one local authority.

Grant Thornton, whose report into the finances of Sligo County Council is due to be considered at a special meeting of the council tomorrow, has called for an overhaul of the “whole local-authority model”.

The report predicts the revenue deficit at the council will rise from almost €13 million now to €27.6 million by 2017 “unless immediate action is taken”. Its capital deficit is over €70 million.

Independent councillor Declan Bree claimed yesterday that the local authority lost €7,000 a day.

The report was commissioned after a delegation from Sligo County Council met Minister for the Environment Phil Hogan last January to discuss the financial crisis.

The consultants have called for a local authority clearance certificate to ensure that those who do not pay local taxes will not get State grants. They also recommend the establishment of a debt-collection unit and a pension-fund mechanism, saying national policies are needed to help local authorities.

Continued cutting of the local government fund is not the solution, “nor will the situation improve just by giving funds to the local authorities”.

They say factors contributing to the growing deficit at Sligo County Council include payroll costs, which will account for 38 per cent of the 2012 budget, water and waste water, inability to collect outstanding debts, a pension funding gap and the “financial impact of the relationship between Sligo Borough Council and Sligo County Council”.

They find that bank loans and an overdraft facility “are at levels not sustainable by the county”, adding that an injection of €10 million from the exchequer to replace a bank overdraft would help bring the county’s finances to a sustainable footing.

The report notes that staff had dropped from 506 in 2008 to 409 during 2012 while another 42 redundancies have been mooted. It says the county had asked the Government to introduce a voluntary redundancy programme but to no avail.

The consultants say there was no mechanism by which the council could take corrective action themselves.

“This is not an issue isolated only to Sligo local authorities. A voluntary redundancy programme is required on a national level,” it adds.

Mr Bree said it would be “disastrous for the future development of Sligo” if the resources of the borough were handed over to Sligo County Council.

The report claims that the county is “essentially supplementing” Sligo Borough Council’s annual income. It also criticised the duplication of services and resources between the two local authorities.

Mr Bree said that despite the fact that Sligo County Council had the worst financial record in the State, the terms of reference for the consultants do not include a review or assessment of management.