Catherine Murphy (Kildare North, Independent)
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Question 425: To ask the Minister for the Environment, Community and Local Government if funds collected by local authorities under the development contribution scheme continue to have a restriction whereby only money collected in any given year may be spent in that year; if so, how that will impact on the ability of local authorities to fund the local contribution of new capital works; if any of these funds are at risk of being refunded on the basis of time limits for carrying out works; the amounts that are held by local authority and the years of same; and if he will make a statement on the matter. [7661/12]

Phil Hogan (Carlow-Kilkenny, Fine Gael)
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In February 2009, my Department set out details of the financial requirements for local authorities relating to their overall management of capital and current accounts. These requirements flow directly from the requirement for Government finances as a whole to be managed in accordance with the Stability and Growth Pact established under the Maastricht Treaty, and the associated limitation on budget deficits. The Government set a limit of €200m for the contribution of the local government sector to the deterioration in the General Government Balance (GGB) in any one year. This is not a new requirement. However, the downturn in the economy and substantial pressures on Government funding generally require a sharp focus in all sectors, including local authorities, to ensure effective control and management of public finances.

In order to stay within the overall GGB limits, it is necessary for local authorities to maintain both their current and capital accounts broadly in balance. The only restriction on local authorities is that, in aggregate, capital income equals capital expenditure in the year. Balance is only required at an overall level and this allows considerable scope for authorities to draw on their existing capital reserves as an element of their overall investment programme. The precise manner in which capital and current accounts are managed in order to achieve the overall balance necessary is a matter for individual local authorities themselves. However, within these overall limits, there is additional capacity for non-mortgage borrowing and the expenditure of capital balances on hand by local authorities. Subject to the maintenance of balanced current and capital accounts, and allowing for the repayment of existing borrowings, up to €250m in new loan finance and expenditure of capital balances on hand can be made available to the local government sector annually to fund capital investment in necessary infrastructure projects. The process of prioritising applications for such projects for 2012 is underway and my Department is being guided by local authorities in respect of the most critical projects requiring funding at this time.

While I appreciate that these GGB requirements impose limitations on local authorities, there are considerable funding constraints at all levels of Government. It is a matter for every local authority to determine its own spending priorities in the context of the annual budgetary process having regard to both locally identified needs and available resources within the GGB limits as set out. The latest year for which we have complete audited information is 2009. The overall Development Contributions balance, comprising both cash and debtors, at the 31 December 2009, is some €962 million. The funds involved are being released over time as projects progress to completion. Development contributions are refundable in respect of special contributions imposed under section 48 (2)(c) of the Planning and Development Acts 2000-2010. Section 48 (12) of the Act sets out the relevant refund provisions.