Micheál Carrigy (Fine Gael)
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I welcome the Minister of State. My Commencement matter relates to the loss of commercial rates as a result of the closure of Lough Ree power station in Lanesborough in 2019, with which the Minister of State will be quite familiar. It has been a major blow to employment and local economic activity in the regions of County Longford, Offaly and Shannonbridge, which suffered a negative impact from the loss not only of commercial rates but of the plants themselves, as well the potential loss from suppliers of the plant, including Bord na Móna. Lough Ree power station paid a total of €1.2 million in rates annually to Longford County Council. It was the single biggest ratepayer in Longford and accounted for 15% of the rate base. To sustain a loss of that magnitude in one year and to compensate on the income side, we would need to pass on an increase of 13.5% in rates to balance the books. I do not think that would be acceptable.

Indeed, we were the first county in Ireland to vary the local property tax, LPT, rate upwards, at 15%, a decision made when all local authority members in Longford came together to maximise potential funding for other projects where matched funding was needed for projects throughout our county. We ring-fenced the 15% increase for the local authority to allow us to apply for projects and ensure we have matched funding for them.

I acknowledge the efforts of the Minister of State, through his Department. The council successfully resolved this critical issue for the financial year 2022. Without that support, there would have been a severe impact on the ability of the council to respond to the challenges it faced. It has meant the council has been able to operate with a level of certainty in what has been a very challenging year. Businesses in the county are recovering at a slower pace than many urban settings. Coming out of Covid-19 and additional challenges facing the sector, such as inflation and the Ukrainian humanitarian crisis, compound the impact of the loss of the guaranteed income from the Lough Ree power station. However, the support the Department has given over the past couple of years has allowed the council to continue to respond with confidence, undertake the regeneration projects we spoke about, invest in our housing stock and continue to support communities and businesses throughout the county.

However, the financial jeopardy caused by the decision to close the power station and the resulting loss in rates remains a difficulty for 2023, 2024, 2025 and 2026. I was elected to the House in 2020 and in September 2021 I sought a guarantee. I have asked for a commitment from the Department and Government to provide certainty to Longford County Council until 2026. The just transition commissioner, Kieran Mulvey, stated two and a half years ago that:

It would be extremely unfair in circumstances over which they had no responsibility and for a decision which was not expected until 2027 that they should be burdened with this sudden loss.

I recommend that an urgent engagement takes place with the Chief Executives of the councils concerned with the funding Departments so that a suitable emergency arrangement can be agreed to alleviate the rate losses over the period 2021-2026.

While we have successfully received the rates every year, the decision is not made until the end of September. Our department of finance in the local authority is putting together financial projections for the year ahead. The situation creates uncertainty.

I wish to take this opportunity to wish our head of finance, John McKeon, well. He has been ill for the past number of months. He is a prudent financial officer in Longford County Council. We look forward to seeing him back in the chair in the finance sector of Longford County Council.

We should get, and need, certainty today. I do not want to come in here next year or the year after to look for funding to be put in place.

Peter Burke (Longford-Westmeath, Fine Gael)
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I thank the Senator for raising this very important issue. I wish to be associated with his comments on John McKeon. I spoke to him yesterday and he is out of hospital after seven months. That is a huge achievement for him in terms of getting through his illness. He is a credit to the local authority in Longford. I am sure he will be back at work shortly. I look forward to engaging with him again.

As I said, I thank Senator Carrigy for constantly bringing this issue up with my office. I acknowledge the funding pressures on local authorities generally, and specifically the negative impact on the commercial rates income caused by the closure of the Lough Ree power station in Longford. It is recognised that the authority was very reliant on rates from the now closed power station which, as the Senator said, accounted for approximately 16% of the rates receipts for the county in 2019. To alleviate this negative impact, my Department has provided compensatory funding to the local authority at a cost of €1.4 million in 2021 and €1.3 million in 2022.I am pleased to confirm that this arrangement will continue in 2023, with support of €1.3 million being secured as part of the recent budgetary process.

As committed to in the programme for Government, Our Shared Future, the move to 100% retention of local property tax, LPT, will take place in 2023. All equalisation funding will now be met by the Exchequer to ensure that all authorities receive, at a minimum, an amount equivalent to their baseline. This increased equalisation requirement will come to €118 million in 2023. The LPT allocation to Longford for 2023 will be €8.9 million and this will include €6.9 million of equalisation funding from the Exchequer. As the Senator may be aware, all local authorities have the opportunity to increase or decrease their basic rate of LPT by 15%. I acknowledge the elected members of Longford County Council for recently taking the decision, as the Senator outlined, to increase the rate by 15% for 2023 and 2024. This upward variation on what is a relatively low base will lead to almost €300,000 in extra income for 2023 alone, which should be of great assistance in what is a challenging financial time ahead.

The Government is making a significant contribution of €333 million in 2023 to support the local government sector. A large portion of this figure, totalling almost €199 million, will go towards assisting local authorities with the cumulative effect on pay costs arising from the national pay arrangements and the unwinding of the financial emergency measures in the public interest legislation. This allocation will ensure the sector will have the necessary resources, in terms of people, to perform its functions and provide in excess of 1,000 essential public services to citizens. Furthermore, as in previous years, my Department will engage with the Department of Public Expenditure and Reform in respect of any additional pay increases that are confirmed for 2023. While the individual allocations for 2023 have yet to be confirmed, it should be noted that Longford County Council will receive €1.6 million towards increased payroll costs for 2022.

I am very aware of the current financial environment in which local authorities are operating and, in recognition of this ongoing pressure, additional support of €60 million has been secured for the sector as part of the budgetary process. This funding is additional to the €333 million already secured towards LPT, payroll and other miscellaneous schemes. The purpose of this additional funding will be to assist Longford County Council and other local authorities in meeting the increasing costs involved in providing a wide range of services. My Department will continue to engage with the Department of Public Expenditure and Reform regarding the issues facing the sector at this time.

Micheál Carrigy (Fine Gael)
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I thank the Minister of State for that commitment to funding but, as I stated, multi-annual funding is needed. I have to come in here every September and bring this issue to the fore in order for it to be announced that we are getting the funding. That is not acceptable. Mr. Kieran Mulvey, the just transition commissioner appointed by the Government, recommended that a multi-annual arrangement be put in place up to 2026. That is the minimum needed. We do not want our finance department to be doing the books again next year and trying to prepare for the year ahead without knowing what the financial situation will be. Local authority members are looking at the possibility of rate increases whereas if multi-annual funding was put in place, there would be no discussions on this. They would know where we stand up to 2027 and could then work on it. I ask that this be taken back to the Department and commitments given. When I raised this issue as a Commencement matter 12 months ago, I was told it would be considered and put in place but that has not been done. I am asking that it be put in place so that we can have that certainty for the next four years.

Peter Burke (Longford-Westmeath, Fine Gael)
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I acknowledge the contribution of the Senator. As I assured the chief executive and his team, we have not been found wanting in delivering the allocation for Longford in the two years since I have been in the Department. This is the third year that we have secured that allocation. When the previous cathaoirleach was seeking to be part of significant capital decisions on purchasing land in the local authority, we were able to provide an assurance that the allocation would be provided again for the current year.

The review of the LPT baseline will be under way in the coming months. That process will involve a review of all funding for the local authority sector. Unfortunately, several counties have been affected by the closure of power stations. Senator Kyne, who is present, is on to me every week about the pressures Galway is under due to the shortfall in funding. We do need to review urgently the LPT base. That will be carried out this year and it is hoped that it will be finished by Easter. That calculation is a big challenge in how local authorities need to be funded so that they can deliver those services. The allocation of €60 million to which I referred in my response, however, will also be there to support local authorities. I will give Longford all the certainty that is in my power to give.