James Bannon (Longford-Westmeath, Fine Gael)
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Question 364: To ask the Minister for the Environment, Heritage and Local Government the reason he has informed all local authorities that local government expenditure cannot take place unless funding is identified, for both revenue and capital account, which will have a negative impact on capital schemes, as loan approval is being withheld for projects such as Mullingar civic offices and Mullingar main drainage, which could result in local authorities such as Westmeath County Council being forced into overdraft; and if he will make a statement on the matter. [20030/09]

John Gormley (Dublin South East, Green Party)
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In February 2009, my Department set out details of the financial requirements for local authorities relating to the overall management of their capital and current accounts. These arise from the requirements for Government finances as a whole to be managed in accordance with the Stability and Growth Pact established under the Maastricht Treaty, and the associated limitation on budget deficits. This is not a new requirement for 2009, but current economic and budgetary considerations require all sectors, including local authorities, to ensure effective control and management of public finances.

In order to stay within the overall limit for the General Government Balance, it is necessary for local authorities to manage their finances and to maintain their current and capital accounts broadly in balance for 2009. Within this general requirement, there is capability for borrowing by local authorities for capital infrastructure. To achieve the objective of the aggregate change in the General Government Balance, my Department is issuing loan sanctions allocated for capital projects on a prioritised basis. Sanctions totalling €106m have issued so far. Priority is being given to meeting contractual commitments.

These requirements do not conflict with the continuing emphasis on capital investment in necessary infrastructure critical to economic recovery and sustaining the economy at local level. The Government and local authorities will continue to progress capital investment projects that can maximise economic, social and environmental returns. Accordingly, the prioritisation of investment opportunities, and targeting of available resources to labour intensive activity and the support of economic recovery, will continue to be the key focus of capital expenditure in the local government sector.

My Department will continue to work closely with local authorities, including Westmeath County Council, to ensure that within the overall financial limits to be met, decisions on these matters are taken in a way which gives the necessary prioritisation to environmental, economic and social infrastructure as part of the overall contribution to economic recovery.