Frank Feighan (Sligo-Leitrim, Fine Gael) | Oireachtas source

I thank the Deputy for giving me this opportunity, on behalf of the Minister for Housing, Local Government and Heritage, to outline the funding and Government support for local authorities with particular reference to County Galway. Local property tax, LPT, was introduced to provide a stable and sustainable funding base for the local authority sector, providing greater levels of connection between local revenue and associated expenditure decisions. The LPT broadens the tax base by reducing the level of Central Funding required by local government.

Local retention of local property tax began in 2015 and since then the overall principles and allocation methodology have broadly remained the same. Currently, 80% of LPT is retained in the area it is collected, with the other 20% supporting equalisation for local authorities with LPT bases lower than their funding baseline. LPT allocations to local authorities for 2022 amount to €523.9 million. These allocations include the Exchequer contribution to equalisation funding of €34.3 million. Galway County Council was allocated €14.5 million under this process for 2022.

In addition to the LPT allocation, the Department of Housing, Local Government and Heritage has also agreed a provisional allocation of €4.44 million for Galway County Council in respect of the additional costs that will arise in 2022 as a consequence of the national pay agreements. This allocation relates specifically to increases in rates of pay and public service pension reduction resulting from the unwinding of financial emergency measures in the public interest legislation, and increases in pay and pensions relating to Building Momentum - A New Public Service Agreement 2021-2022. The overall aim of the allocation is to ease the burden on local authorities of the increased payroll costs in 2022. As part of the budget process, the Department engaged with the Department of Public Expenditure and Reform concerning the financial impact on the sector and secured the allocation, which will assist local authorities to meet the costs arising.

Across all schemes and funding sources the Department provided €82.9 million in 2020 and €85.9 million in 2021 to Galway County Council. The payments in 2020 also included an allocation to Galway County Council of €1 million. This funding was linked to the operation of municipal districts and was subject to a small number of requirements, including that the funding be divided equally among the municipal districts. The payments in 2021 included an allocation of €600,000 for additional discretionary income. The programme for Government, Our Shared Future, commits to bringing forward LPT reforms including providing for all money collected locally to be retained within the county. The Government has signalled its intention that the move to 100% local retention of LPT will be introduced over the 2023 and 2024 budgetary cycles. It is expected that the LPT yield will change following revaluation last November and the distribution model will be reviewed when new yield per local authority is fully quantified; however final figures are not yet available. Given the need for timely information to be provided to local authorities for their budgetary process and the need for final LPT figures to inform that, it is not expected that baselines will be reviewed in advance of the 2023 local authority budget process.

Each local authority situation is complex and it is important that sufficient time is taken to analyse and assess potential options in that respect. Preliminary census data will also form an important input to that deliberation. The Department of Housing, Local Government and Heritage will, however, be considering, in consultation with the Department of Public Expenditure and Reform, the potential for a move towards 100% retention for 2023.

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