Malcolm Noonan (Carlow-Kilkenny, Green Party) | Oireachtas source

The case was very well made by the Senator. The funding system for local authorities is complex, with authorities deriving their income from a variety of sources, including commercial rates, charges for goods and services, and funding from central Government. Local authorities vary significantly from one another in terms of size, population, population distribution, public service demands, infrastructure and other income sources. All of these factors should be taken into account when comparing levels of funding for different local authority areas. Most of the funding from central Government must be used for specified services. This can be grouped into five broad programme categories: recreation, education, environment, housing and transport.

Across all schemes and funding sources, the Department of Housing, Local Government and Heritage provided €51.1 million and €82.9 million to Galway County Council in 2019 and 2020, respectively. The increase between 2019 and 2020 is due to an increase in housing funding, as well as funding in respect of the Covid-19 rates waiver and other Covid-19 related expenses that occurred in 2020.

It is a matter for each local authority to consider how it can maximise local income sources and manage its own spending in the context of the annual budgetary process. Local authority members may decide, as part as of the process, to vary annual rate of valuation, ARV, and local property tax, LPT, in order to increase revenue available to them. I understand that Galway County Council has opted not to use these tools for many years.

The power to vary the local property tax is a reserved function. Local authorities must balance with these priorities against available resources. To achieve that balance, the elected members must make informed and necessary choices to balance the level of service provision with the available income. For 2021, 22 of the local authorities throughout the country opted to vary the local property tax upwards, while only three have opted to vary it downwards.Arising from the variation decisions, the local authority sector will gain an additional €11.5 million from the LPT when compared with 2020.

Galway County Council would have gained an additional €2.2 million if it had applied the maximum upward variation of 15% for 2021. Galway elected members decided not to vary the LPT rate for 2021, thereby denying themselves additional discretionary income. The Department does not, as a matter of course, provide supplementary funding to local authorities in lieu of the LPT changes. Doing so would undermine one of the reasons the LPT was introduced, namely, to strengthen the link between the decision-making of elected members of local authorities and services provided in the area. This has consistently been the position since 2015.

The programme for Government, Our Shared Future, commits to bringing about reforms in the workings of the local property tax. These reforms will involve bringing new homes, which are currently exempt from the tax, into the taxation system, as well as providing for all money collected locally to be retained within that county. This will also be done on the basis that those counties with a lower LPT base are adjusted via an annual national equalisation fund paid from the Exchequer, as is currently the case. The Minister for Finance is examining options for reform of the LPT in light of the 2019 interdepartmental LPT review report, the views of the Committee on Budgetary Oversight and the programme for Government commitments.

On 13 April 2021, my colleague in the Department, the Minister of State, Deputy Peter Burke, met a delegation from Galway County Council and agreed the Department will work with the council to explore the options available to putting its finances on a more sustainable footing. Preliminary work is under way in the Department and I understand that efforts in this regard will intensify in the run-up to the local authority budgetary process later this year.

Notwithstanding all of what I have outlined, Galway County Council was given an exceptional allocation of €1 million to support the municipal districts in 2021 and to be distributed equally among them. This was a significant commitment by the Government in supporting the council, which, coupled with the more general Covid-19 related supports provided in both 2020 and thus far this year, represents significant financial support for the council and the wider local government sector.