Damien English (Meath West, Fine Gael) | Oireachtas source

I thank the Deputy for giving me the opportunity, on behalf of the Minister, Deputy Coveney, to outline the importance of the equalisation fund for local authorities such as Carlow County Council in the context of the local property tax allocations.

I was lucky enough to be in Carlow recently to meet up with the Deputy, representatives of the local authority and some Chamber of Commerce members. Carlow is a town that is in a hurry to get itself back to the pace it was at a few years ago and restore itself to those glory days. I have no doubt Carlow is well positioned to avail of schemes that I hope we will be announcing in the action plan for housing in the weeks ahead and that we will be able cater for some of the demands there along with the issues around this fund. There are other schemes that we hope to announce that might address some of the issues that were raised during my trip to Carlow. It was nice to be there turning a sod on a housing development. Apart from having action plans we need to have action on the ground which I see in Carlow. We want to encourage more of that as quickly as we can.

The local property tax was introduced to provide an alternative, stable and sustainable funding base for the local authority sector, providing greater levels of connection between local revenue raising and associated expenditure decisions. This reinforces local democratic decision making and encourages greater efficiency by local authorities on behalf of their electorates.

At the time when local retention of local property tax was introduced in 2015 and became a key funding line for the local government sector, the Government decided that no local authority should receive less in LPT than it had received as a general purpose grant from the local government fund in the previous year, which was 2014. A similar approach was adopted in 2016. Therefore, Carlow’s LPT allocation in 2016 is in line with its former funding level, as is the case for all local authorities receiving equalisation funding.

As we all know, local authorities vary significantly from one another in terms of size, population, public service demands, infrastructure and other income sources, and their general purpose grant funding levels in the past have reflected this variety. It is not, therefore, possible to compare absolute levels of funding received in local authority areas as to do so could not reflect the vast differences that exist between them.

The 2016 local property tax allocations to Carlow County Council were made in accordance with Government’s decision that 80% of LPT is retained locally to fund vital public services, while the remaining 20% is redistributed to provide top-up funding to certain local authorities that have lower property tax bases due to the variance in property values across the State.

The estimated 2016 LPT yield in County Carlow is €3.85 million and so it follows that €3 million of this amount, representing 80% of the yield, is retained locally in accordance with the Government’s decision. The exact same rule has been applied to every other local authority in the State.

The Government also decided that no local authority should receive less income from LPT in 2016 than in the previous year. This decision, in effect, meant that the minimum amount of funding allocated to any local authority in 2016 would at least equal its general purpose grant in 2014. This was to ensure that no local authority would be any worse off from local retention compared with previous funding from the local government fund.

Carlow County Council received €5.35 million as a general purpose grant in 2014. Its locally retained LPT income of €3.08 million in 2016 is €2.27 million lower than its 2014 general purpose grant. Accordingly, it was entitled to receive €2.27 million from the equalisation fund in order to ensure that the year-on-year position of the authority is unchanged and the authority is consequently no worse off because of local retention of LPT. The same formula has been applied to all other local authorities that needed to receive top-up funding from the equalisation fund.

The overall level of equalisation funding required in 2016 is €108.3 million, of which €94.7 million is funded by local authorities from their 20% contribution, with the balance of €13.6 million from central State coffers. As the Deputy will appreciate, there is a finite level of funding available for redistribution to those local authorities, such as Carlow County Council, which require additional support to meet this requirement. It is important, therefore, that they are all treated in a comparable manner, which is the case currently. Any variation to that approach for one individual local authority would introduce an element of inequity and presumably lead to similar demands from all other authorities.

The Minister, Deputy Coveney, and I - based on my trip to Carlow - are aware of the funding pressures there have been in recent years on all public bodies, including local authorities, and on the competing demands for improvements in services. Local retention of local property tax has now established itself as an essential alternative source of funding for the local government sector. LPT broadens the tax base.

However, we recognise that the bodies in question are under pressure and we will do our best to increase the level of funding.

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