Thursday, 24 June 2021
Department of Housing, Planning, and Local Government
32. To ask the Minister for Housing, Planning, and Local Government the reason Galway County Council is being underfunded compared to counties of a comparable size and with a greater population; and if he will make a statement on the matter. [32357/21]
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 factors which should be taken into account when comparing levels of funding in different local authority areas.
Most of the funding from Central Government must be used for specified services. These can be grouped into 5 broad programme categories: recreational, education, environment, housing and transport. Across all schemes and funding sources, my Department provided €51.1m and €82.9m 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 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 of that process, to vary the ARV and LPT in order to increase the revenue available to them. I understand that Galway County Council has opted not to use these tools for many years.
The power to vary LPT is a reserved function and local authorities must balance those 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 their local property tax upwards while only three have opted to vary it downwards. Arising from these variation decisions, the local authority sector will gain an additional €11.5 million from LPT when compared with 2020.
It should be noted that Galway County elected members decided not to vary the LPT rate for 2021. My Department, as a matter of course, does not provide supplementary funding to local authorities in lieu of LPT changes; to do so would undermine one of the reasons LPT was introduced, which is 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 LPT. These reforms will involve bringing new homes, which are currently exempt from LPT, into the taxation system as well as providing for all money collected locally to be retained within the 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.
To this end, the Minister for Finance, Paschal Donohoe T.D., recently published the Heads of the Finance (Local Property Tax) (Amendment) Bill 2021. The Bill will give effect to a package of measures in line with the Programme for Government to address the future of the Local Property Tax. The legislation required to implement those changes falls under the remit of the Department of Finance as a tax policy matter and will be considered by the Houses of the Oireachtas in due course. Minister Donohue also signalled the Government’s intent to move to 100% local retention from 2023. Any changes to the allocation process may be considered in that context.
Finally, on 13 April 2021, I met with a delegation from Galway County Council and agreed that my Department will work with Galway County Council to explore the options available to putting their finances on a more sustainable footing.