Pat Deering (Carlow-Kilkenny, Fine Gael)
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I am glad to have the opportunity to highlight this issue, which is a problem for many small counties. I will articulate the views of Carlow County Council, the area I represent.

Carlow County Council collected €3.85 million in local property tax, of which €3.08 million is retained as the 80% contribution for the local authority. It receives a contribution from the equalisation fund of €2.27 million, which brings its total fund from the local property tax to €5.35 million, a reasonably small amount when compared with other counties of a similar population.

Roscommon County Council's 80% contribution is €3.2 million, but it receives a contribution from the equalisation fund of €5.99 million, giving a total contribution of €9.11 million. Sligo, with a population similar to that of County Carlow, receives a total amount of €9.99 million in contributions from the fund. It is almost impossible for a county of Carlow's size to provide the services required without proper funding. I believe this fund needs to be redistributed to take into account the small counties that do not have the same ability to raise their own funds.

The main source of funding for local authorities comes from commercial rates and in Carlow's case the commercial rate base is quite small. Unfortunately, in recent years a number of large industries, including the sugar factory which historically was the largest contributor to commercial rates in County Carlow, have now closed. Other large contributors, Braun and Läpple, have also closed. That income stream has now gone.

The commercial water charges will transfer to Irish Water in coming weeks as that process started on 1 July. Therefore that funding stream has also gone.

With the introduction of the housing differential rent scheme a number of local authorities, including Carlow, are losing funding from that point of view. This has resulted in a loss of approximately €250,000 to County Carlow in the coming year.

I ask the Minister of State and the senior Minister to redistribute the fund so that everybody would be on a level playing field. I outlined cases of counties with similar populations to Carlow being treated more favourably. We also need to look at the overall funding of local authorities to bring the funding stream back to where it was in 2008, 2009 and 2010. As with other local authorities, the overall budget for Carlow County Council has reduced by approximately €4 million since 2008. That €4 million could provide many extra services and the only way a local authority such as Carlow County Council can provide extra funding is through increasing the local property tax, which is not always possible to do. A 1% increase in the local property tax in County Carlow would equate to €38,000, which will not provide much of a service.

In his reply I ask the Minister of State to address the two issues I raised - the redistribution of the local property tax fund and a new funding model for local authorities. There may be other initiatives which might help local authorities, including the scheme to encourage people to come back to live in town centres. I am delighted the Minister of State visited Carlow in recent weeks to investigate some of the issues that could be helpful to Carlow and other counties. I hope that next Tuesday's announcement might contain some initiatives that could be helpful in that regard.

Damien English (Meath West, Fine Gael)
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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.

Pat Deering (Carlow-Kilkenny, Fine Gael)
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I thank the Minister of State for his favourable comments about County Carlow and the possibility of some helpful incentives being introduced in the coming weeks. I wish to return to my initial point that there should be a redistribution of the fund. While I accept the rationale behind the decision to distribute the funds as they have been distributed, I would like to compare the distribution to County Carlow to the distribution to counties of a similar size. I mean no disrespect to County Leitrim when I mention that its population is considerably smaller than the population of County Carlow. County Leitrim has a population of approximately 30,000 and receives a total contribution of €8.28 million from this fund. The population of County Carlow is almost twice the size of that of County Leitrim, but it receives just €5.35 million. The figures do not seem to add up. While I accept the rationale behind what the Minister of State is saying, I stress that there is a need to look at details such as the population in each county and the size of the county towns in each county. I suggest that such an examination will reveal that differing approaches are being taken. It is not quite a level playing field.

I would like to mention one of the mistakes that could be addressed at this stage. In the past, towns over a certain size that had town councils received block grants to enable those councils to look after certain issues. That has been gone for the last few years. We have seen a negative result from that. The funding that was previously available through the block grant, which was used to deal with issues in large towns, is no longer available because of the disappearance of the town councils. There needs to be a re-examination of the whole funding model. It is obvious that incentives are very important. I welcome any incentives that may come on stream in the next week or ten days. Overall, something more definite needs to be put in place so that local authorities can plan for the future. Such an approach would enable regional towns that have suffered in recent years as a result of the downturn to build for the future and look forward to attracting the businesses that are required. I hope such businesses will be coming down the line. I have suggested what we can do to give them the incentive to go forward over the coming period.

Damien English (Meath West, Fine Gael)
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I understand the point the Deputy is making. When I went into this Department, I noticed some of the figures he has presented to the House. It seems that some counties do well for historical reasons. This is constantly being monitored.

The Minister, Deputy Coveney, and I are very conscious of the pressures on the county councils. Councils in the greater Dublin region, in particular, came under a great deal of pressure from housing developments in previous years and might not have the right base to match that now. We are aware of that. As I have said, we are coming forward with plans. The housing action plan will be published next week. Other plans will be announced as well. We will try to tailor programmes to help to deliver more funding into county councils that want to try to rebuild their town centres, put their town centres to better use and make their town centres more attractive to business so that jobs will be created.

The whole idea here is that if we can get more industry into counties like Carlow, Wicklow, Meath and Kildare, that will help to generate rates and thereby increase the funding available to local authorities for the provision of services. There is a great deal of pressure on county councils. During the boom years, a great deal of additional housing was developed in areas where jobs were not being created. I understand the major pressure that comes on the delivery of services as a result. We are noting that. The census figures that were published this morning will also feed into our thinking in this regard. If one compares the level of funding received in many counties to the population in those counties, one will appreciate the difference it makes when services are being provided. That is something we will be monitoring as well. I hope we can work on this in the years ahead. As the economy improves, funding is also improving, thankfully. We need to make sure it is channelled into the right places through the right Departments.