Councils 'struggling to survive' as cutbacks hit essential services
Published 22/04/2014 | 02:30
THE scale of the economic crisis facing local authorities as they struggle to fund essential public services is laid bare in a new report.
Cuts of more than 30pc in government funding since 2008 – which reduced income by €490m a year – have left city and county councils struggling to survive, and frontline services will be hit unless finances improve.
City and county managers have also warned that businesses that fail to pay local charges – including commercial rates and water bills – are effectively being subsidised by councils, which allow them to pay arrears over time. Local authorities will eventually have to choose between assisting hard-pressed businesses stay afloat and protecting their income base, they say.
The warning is contained in the Service Indicators in Local Authorities 2012 report, which benchmarks councils against each other in how they conduct their day-to-day business.
Despite reducing staff levels by 23pc between 2008 and 2012, and reducing costs by €839m in the same period while freezing or reducing commercial rates, the sector is struggling.
"Funding continues to be a challenge for local authorities and this restricts the scope of local authorities to maintain existing levels of services," the report says. "Local government has responded very rapidly to the constrained funding environment in order to protect local services. Without such measures, essential services simply could not have been maintained in recent years.
"In spite of efforts to protect frontline services, continued fiscal consolidation will inevitably impact on the range and quality of services that local authorities can deliver."
In 2008, Government provided just over €1.6bn in direct funding to councils, which has since fallen to €1.1bn.
Officials are concerned about poor payment rates for essential services, but said they were allowing firms to pay off arrears over time. However, they warned they were, in effect, providing a subsidy. "The widespread application of payment plans across the local authority sector effectively increases the cost of interest for local authorities and represents a subsidy for business," the report says.
"Taken together, the fall in collection rates and cost of bad debts services to erode the rates base, exerting further pressure on local authority finances."
Some €500m is expected to be collected in the local property tax every year, and earmarked for local services. But Irish Water has received a large portion of the proceeds for this year. A spokesman for the Department of the Environment said that, by 2015, it would be used to fund services.