John Perry (Sligo-North Leitrim, Fine Gael)
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I welcome the Minister of State at the Department of the Environment, Community and Local Government, Deputy Paudie Coffey, and wish him well on his appointment. I hope he will convey our concerns about Sligo County Council to the Minister, Deputy Alan Kelly. The council is facing a challenging period, with a substantial capital debt and a growing current spend arising from the gap between annual expenditure and income. The council's published financial statements show the scale of the problem, as do a range of reports analysing the problem. In addition, we have had commentary from various sources, some of which has not been helpful in finding a solution.

My colleague, Deputy Michael Colreavy, and I are taking the opportunity to call on the Government to assist Sligo County Council, given that its difficulties emanate in large part from developments which took place in 2008 and thereabouts. During the boom Sligo was designated a gateway city based on a projected population of 60,000. Growth on that level never materialised, but much of the capital investment in which the council engaged was based on this unrealistic growth projection. The council management team and councillors have been working to address the issue and had a meeting with the Minister, Deputy Alan Kelly, last week. The executive, working with the councillors and chairman, is obliged to come up with a clear management plan, based on a ten year timeframe, to deal with the debt.

Significant savings have been achieved in several areas through policies on redeployment, voluntary transfer and voluntary retirement, while a significant allocation to the capital account has relieved some of the pressure on the current spending debt. However, there are serious consequences in deferring the problem to a later date. Reductions in the local government general purpose grant allocation and in planning fees and reduced rate collection revenues have amounted to a significant challenge for the council.

Michael Colreavy (Sligo-North Leitrim, Sinn Fein)
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As long ago as last July, Sligo county councillors sought a meeting with the Minister for the Environment, Community and Local Government, Deputy Alan Kelly, about the council's precarious budget position. It is in this precarious position partly because it followed the then Government's policy of investing in water and wastewater infrastructure. Arising from that investment, the council's costs doubled from €5 million in 2008 to €10 million in 2013. In the same period, the local government fund, the council's main source of income, was halved in the wake of the mismanagement of the national finances.

Given that the council was implementing Government policy, had departmental approval at every stage for the infrastructural projects it undertook, endured a dramatic fall in its main funding source and subsequently transferred infrastructure to Irish Water without compensation for its major investment in these assets, it should be given assistance, support and advice. Despite the difficulties it faces, savings have been made. I understand, for example, that a workforce action plan has been put forward which provides for the transfer of front-line maintenance staff, including housing staff, arising from the dissolution of Sligo Borough Council. It seems, however, that there may well be outsourcing of work currently being done by maintenance staff which will ultimately see a higher cost for an inferior service.

The Minister has refused to meet the councillors or me. I understand, however, that last week he did meet at least one Deputy and, possibly, a Senator from the Government parties. The outcome of that meeting seems to be that Sligo County Council has two weeks to get its books in order or it will be replaced by a commissioner. It is scandalous.

Paudie Coffey (Waterford, Fine Gael)
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I am taking this Topical Issue on behalf of the Minister for the Environment, Community and Local Government, Deputy Alan Kelly. I thank the Deputies for providing me with an opportunity to clarify the position on the financial difficulties of Sligo County Council. The continued deterioration of the council's financial position is of serious concern to the Minister, notwithstanding the achievement of savings in recent years, as outlined by the Deputies. On Thursday, 13 November, the Minister met the chief executive of Sligo County Council and his senior management team to discuss these very issues. It was a constructive and useful engagement.

The council has been incurring revenue deficits for several years such that the cumulative deficit now stands at €19.67 million. Long-term debt is in excess of €120 million. It is a matter for each local authority to determine its own spending priorities in the context of the annual budgetary process, having regard to Government policy and both locally identified needs and available resources. The elected members of a local authority have direct responsibility in law for all reserved functions of the authority, which include adopting the annual budget and authorising borrowing.

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Elected members are democratically accountable for all expenditure by the local authority. The Minister wishes to be clear that the financial difficulties of Sligo County Council have not been caused by the financial model used to fund local authorities. While it is true that general purpose grant funding to Sligo County Council has decreased from a high of €22.22 million in 2008 to €15.58 million in 2013 - not halved, as Deputy Colreavy stated - this reduction of 29% has been less than the national average of 35%. Local authorities are independent bodies, with members being responsible for budgetary and borrowing policies, and Sligo County Council has had the same requirements regarding implementing Government policy placed on it as all other local authorities.

Other factors such as poor income collection have significantly contributed to Sligo County Council's financial difficulties. The commercial rates collection level for the county and borough in 2012 was 62% compared to a national average of 75% and the council's collection level declined even further to 59% in 2013. Sligo County Council has an uncollected rates debt of €6.8 million. Its water collection levels have averaged 48% over the period from 2008 to 2012, resulting in an estimated loss of income of over €1 million per year. Collection levels for housing loans are also poor, at 47%, with arrears of €1 million. Housing rent income collection is 80%, which is below the level achieved by comparator local authorities.

While it is a matter for individual local authorities, including Sligo County Council, to manage their day-to-day finances in a prudent and sustainable manner, the Department is in regular consultation with the council regarding its financial position. The Minister has set aside an allocation of €1 million in additional funding for 2014 for Sligo County Council to assist it to take the steps necessary to move to a more sustainable financial position. The payment of this is fully conditional on a realistic and achievable financial plan, which charts a path to long-term financial sustainability, being agreed between the Department and the council. Financial stability must take precedence in all of Sligo County Council's planning in the coming years. It is essential that the 2015 budget addresses the gravity of the financial situation in Sligo County Council, building on the savings achieved to date.

The Minister and the Department are committed to continuing to support the council in its efforts to restore financial stability. However, as the Minister pointed out at his meeting with Sligo County Council, the next steps need to be taken by the council, through a firm commitment, reflected both in its budget for 2015 and through the agreement of a long-term financial plan with the Department. By ensuring Sligo County Council is supported in making these difficult decisions that will, in the longer term, place it on a more realistic and sustainable path to growth and renewal, the Minister is certain Sligo can put its difficulties behind it and focus on consolidating its position as a leading economic centre for the north west in the future.

John Perry (Sligo-North Leitrim, Fine Gael)
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I thank the Minister regarding the management plan. It is very important that we allay the fear that the council may be abolished. The council is willing to come up with a plan that will be acceptable to the Minister for the Environment, Community and Local Government, Deputy Kelly, and work with him to find solutions to its financial problems. The Minister has met the county manager and the chairperson of the county council regarding the potential to create a plan and the urgency of putting the plan in place. The Minister has set aside €1 million for 2014 on condition that a plan of action will be formulated. I have spoken to the manager and the chairperson, and they are working on a plan for the county's future finances, which will be on the Minister’s desk in the next week. I am delighted to note that the Minister will work with the council in an amicable way to deal with the financial challenges which, clearly, have been inherited from 2008. The most important aspect of this is that the financial indebtedness of the council has been there for a number of years. The council cannot take any cuts to services in the county. We are very anxious to ensure no cuts take place and that we work out a long-term, ten-year solution to deal with the accrued debt on the council’s books. I want that assurance from the Minister of State.

Michael Colreavy (Sligo-North Leitrim, Sinn Fein)
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The council’s chief executive put forward the information that the Local Government Fund, the council’s main income source, was halved between 2008 and 2013 as a result of the collapse of the national finances. I read directly from the report, but changed the word "collapse" to "mismanagement". The Minister of State said the Minister met with the council and this is the point. He did not meet the council but the chief executive. He met a Deputy and Senator or Senators of the Government’s party after I had written to him. I was told about this meeting only after the event. Although I am old and experienced enough to handle disrespect from a Taoiseach or Minister, I will not tolerate the people who voted for me being disrespected by the failure on the part of the Minister, Deputy Kelly, or any Minister to engage with those with whom he might disagree. If the Minister wants nodding dashboard dogs to discuss any contentious issue, so be it, but the Minister of State should not call it a democratic revolution or an improvement in democracy. It is not democracy, but dictatorship.

Paudie Coffey (Waterford, Fine Gael)
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It is unfair and unwelcome that Deputies would try to personalise what is a very serious problem for Sligo County Council. The Minister, Deputy Kelly, is seriously concerned and is engaged with the management team of Sligo County Council to find a solution to assist it in addressing these challenges. It is encouraging that the council is preparing a financial plan to deal with the challenges it faces. As I said, the continued deterioration of the council’s financial position is a concern to us all. However, a situation whereby annual deficits arise despite the council's having budgeted for balancing income and expenditure is untenable.

Sligo County Council must move to a position of surplus in 2015 and into the future. We have all been required to seek efficiencies in recent years to adjust to the economic challenges the nation has faced, and none of us can continue to spend beyond our means. Sligo County Council will have to significantly improve its income collection levels across all areas and move towards adequate cost recovery in all service provision areas, where possible. The Minister and Department are committed to continuing to support the council in its efforts to restore financial stability. However, the council must take the next steps itself, through a firm commitment reflected in its budget for 2015 and through the agreement of a long-term financial plan with the Department.