John Gormley (Dublin South East, Green Party)

In February 2009, my Department set out details of the financial requirements for local authorities relating to the overall management of their capital and current accounts. These arise from the ongoing requirements 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. In this regard, the Government set a limit of €200 million for the contribution that the local government sector can make to the deterioration in the general Government balance in any one year. This is not a new requirement for 2009, but current economic and budgetary considerations require all sectors, including local authorities, to ensure effective control and management of public finances. To stay within the overall limit for the general Government balance, it is necessary for local authorities to manage their finances and to maintain their current and capital accounts broadly in balance for 2009. Within this general requirement, there is capability for borrowing by local authorities for capital infrastructure.

Development contributions have been an important addition to the capital funding resource of local authorities but they are only one element. Local authorities generate capital income from a variety of sources. There is no prohibition on councils spending development contributions. The only requirement on local authorities is that in aggregate capital income should equal capital expenditure in the year.

My Department will continue to work closely with local authorities to ensure that within the overall financial limits to be met, decisions on these matters are taken in a way which gives the necessary prioritisation to environmental, economic and social infrastructure as part of the overall contribution to economic recovery. I recognise that these requirements may pose challenges for a small number of local authorities and I am making every effort to address this matter within the overall GGB requirements for the sector.

The accounting code of practice requires local authorities to submit their annual financial statements by 1 July. Therefore figures for 31 December 2008 are not yet available. The overall development contributions balance at 31 December 2007, comprising both cash and debtors, is some €1.524 billion. A breakdown by local authority is in the following table. These funds are being released over time as projects progress to completion.

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