Seanad debates

Wednesday, 22 June 2022

Nithe i dtosach suíonna - Commencement Matters

Local Authorities

10:00 am

Photo of Josepha MadiganJosepha Madigan (Dublin Rathdown, Fine Gael) | Oireachtas source

I thank Senators Kyne and Dolan. At the outset, the Minister of State, Deputy Burke, has informed me that both Senators have been in constant contact with him about this issue and secured a package last year through their work, and that he will work closely with them again over the coming period of time.

The local property tax, LPT, as we know 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. LPT allocations to local authorities for 2022 amount to €523.9 million. This figure includes the Exchequer contribution to equalisation funding of €34.5 million. Galway County Council was allocated €14.5 million 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 reductions 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 costs in 2022. As part of the budget process the Department engaged with the Department of Public Expenditure and Reform on 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 resources the Department has 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, funding that was linked to the operation of municipal districts. In 2021, Galway received an allocation of €600,000 for additional discretionary income.

It should also be noted that unprecedented support was provided for local authorities during the Covid-19 pandemic. One of the earliest priorities was to secure funding to provide a waiver of commercial rates for businesses impacted by the pandemic while simultaneously supporting local authorities. In 2020, Galway County Council applied a 100% commercial rates waiver to just over 3,500 businesses and recouped €10.2 million in that regard. In addition, in recognition of Covid-19 related income losses and additional expenditure incurred, funding of €6.7 million was provided to Galway County Council in 2020. This support continued in 2021 when the Government introduced a nine-month commercial rates waiver applying to the businesses most seriously affected by the restrictions, and a more targeted waiver for the final quarter of the year. Galway County Council received €7.3 million for this waiver and an additional €1 million for Covid-19 related income losses and expenditure for 2021.

The programme for Government 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 the 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 local property tax 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 position 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 Minister will, however, be considering, in consultation with the Department of Public Expenditure and Reform, the potential for a move towards 100% retention for 2023.

I acknowledge the current funding pressures on local authorities and, as such, the funding for Galway County Council and other local authorities will be kept under review as part of the normal Estimates process for 2023 and in the context of the aforementioned final local property tax yield following the revaluation process.

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