Bernard Durkan (Kildare North, Fine Gael)
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This is a simple matter that arises from a scenario whereby, through good management and prudent administration, Leixlip Town Council has achieved savings over the past number of years. We all subscribe to that as being important, progressive and admirable in the present climate. There are those of us who suggest that should have applied more in the past. The town council, having accumulated savings of approximately €300,000, would like to spend the money in its administrative area but because, I presume, of the proposed abolition of town councils, that is not in accord with departmental policy and, as a result, the town council is concerned about this. The town councillors, naturally, want to spend the money in their area because they feel they have adequate and important capital projects that require this expenditure.

Apropos of nothing, in general I do not agree with the principle that taxation should be spent where it is raised. That is unconstitutional. However, in the case of an authority at local level that has done its job well and achieved savings for a particular purpose, it is difficult to explain why it should not be allowed to spend that money. It is unfair. The only reason is the change in the administrative areas in the proposal to abolish town councils, notwithstanding their replacement by extra membership on local authorities.

I ask the Minister to consider the situation because of the good management of the authority in question. We must recognise what it has done so far and acknowledge its good management and practice in keeping with the best international traditions. Would it be possible to allow the town council to spend the money on the capital projects and programmes it has identified that would be of benefit to the local community, rather than spending the money in the wider amorphous area that will exist after the local elections?

Phil Hogan (Carlow-Kilkenny, Fine Gael)
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Before I go into the detail of the case Deputy Durkan raised, I will give him some background information about certain controls in place since 2009 when a circular was issued by my Department in respect of the control and monitoring of local authorities' contribution to the general government balance, or GGB. The GGB is the measure of the borrowings and surpluses or deficits across the wider government sector, including local government.

The downturn in the economy and the pressures on Government funding generally require a sharp focus in all sectors, including local government, to ensure effective control and management of the public finances. In this context, the Department of Finance advised in 2009 that there was a deficit limit within the national GGB assigned to local government. That limit was set at €200 million. 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 EU-wide limitation on budget

In order to stay within the overall GGB limit, it is necessary for local authorities to maintain both their current and capital accounts broadly in balance in any one year. The only restriction on local authorities is that, in aggregate, capital income should equal 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. Within these overall limits, however, there is additional capacity for non-mortgage borrowing and the expenditure of capital balances on hand by local authorities. The process of prioritising applications for such projects for 2013 has been completed and my Department was guided by local authorities in respect of priority projects requiring funding this year.

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, including Leixlip Town Council, to determine its own spending priorities in the context of the annual budgetary process, having regard to both locally identified needs and to the available resources within the GGB limits, as outlined.

I checked further into the accounts for Leixlip. Deputy Durkan may wish to note that no request has been received from Leixlip Town Council to spend the balances in hand this year, although I have received a request to meet a delegation from the council. Leixlip has a non-rating town council. In 2012 its overall expenditure budget was €355,725 and its own local income was €3,000. In order to bridge the gap it would have submitted a schedule of town charges to Kildare County Council. The council has been transferring money from its revenue account - €41,000 in 2012 - towards capital projects to deal with matters such as the town hall fund, election costs, a playground project, town improvement and the Leixlip spa. I also inform the Deputy that the balance on the capital account at the end of 2012 was €348,167.

Bernard Durkan (Kildare North, Fine Gael)
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I thank the Minister for his comprehensive and informative reply. If I were a thinking person - which I am not - and on the ground, I would come to the conclusion that the Minister would be open to a submission from the town council seeking permission to spend the moneys in an appropriate fashion in concert with its entitlement and requirements, that due regard would be had to its adherence to good fiduciary policies in recent years and that, as a result, it might be possible to work out an equitable solution.

Olivia Mitchell (Dublin South, Fine Gael)
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Is the thinking man correct?

Phil Hogan (Carlow-Kilkenny, Fine Gael)
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I assure the Acting Chairman that Deputy Durkan does not interpret me correctly. I have set out clearly that Leixlip Town Council has sufficient money in its capital account, as it had in 2012, to do some of the things it wishes to do. It should not take money from the revenue account in order to achieve the same purpose.