Written answers

Tuesday, 28 May 2013

Department of Environment, Community and Local Government

Local Authority Funding

Photo of Bernard DurkanBernard Durkan (Kildare North, Fine Gael)
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481. To ask the Minister for Environment, Community and Local Government the implications of circular FIN 03/2009 dated 13 February 2009 entitled Control and Monitoring of Local Authorities Contribution to the General Government Balance for all local authorities in County Kildare; the way this will affect the authorities in the aftermath of the proposed abolition of town councils; and if he will make a statement on the matter. [25605/13]

Photo of Phil HoganPhil Hogan (Carlow-Kilkenny, Fine Gael)
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In February 2009, my Department set out details of the financial requirements for local authorities relating to their overall management of capital and current accounts. These requirements flow directly from the requirement 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. The local government sector must not impact negatively on the General Government Balance (GGB) in any one year.

The downturn in the economy and substantial pressures on Government funding generally require a sharp focus in all sectors, including local government , to ensure effective control and management of public finances. In order to stay within the overall GGB limit, it is necessary for local authorities to maintain both their current and capital accounts broadly in balance. The only restriction on local authorities is that, in aggregate, capital income equals capital expenditure in the year. Balance is only required at an overall level and this allows considerable scope for authorities to draw on their existing capital reserves as an element of their overall investment programme. The precise manner in which capital and current accounts are managed in order to achieve the overall balance necessary is a matter for individual local authorities.

The Action Programme for Effective Local Government - Putting People First, sets out Government decisions for a range of local government reform measures including the decision to replace town councils with a new comprehensive model of municipal governance to strengthen local government within counties and address weaknesses and anomalies in the current system.  While the Action Programme will have no impact on the requirements I have set out for the management of the GGB, I would expect that cost savings will arise from sub-county restructuring through operational integration and elimination of duplication. It is a matter for every local authority to determine its own spending priorities in the context of the annual budgetary process having regard to both locally identified needs and available resources within the GGB limits as set out.

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