€790m cash pile off-limits to struggling councils
LOCAL authorities are sitting on an almost €800m cash pile they are not allowed to spend, despite being forced to borrow €10m a week to keep their heads above water.
City and county councils have been told by the Government they are not allowed to spend the €790m in cash reserves.
It was taken in development levies during the property boom but now the Government has imposed a spending ban as part of plans to keep the public finances afloat.
The money cannot be spent because council debt is treated as state borrowings by rating agencies and the bond markets. Despite the cash pile, many local authorities have hefty bank borrowings, resulting in a deficit on their balance sheets.
The Irish Independent has learned that cash balances of hundreds of millions of euro are sitting in bank accounts, despite council finances having collapsed to catastrophic levels.
The Department of the Environment told the authorities they can only spend what they take in during the year, and cannot touch their reserves.
In 2007, councils collected €945m in levies. In the first six months of this year, just €40m has been collected.
New figures also show that local authorities are owed another €848m in unpaid levies -- €190m of this has been written off as uncollectable.
City and county councils are struggling to repay bank loans drawn down to buy housing land, with some forced to renegotiate their borrowings.
Development levies are charged on construction projects granted planning permission and are designed to help local authorities pay for amenities and essential public services to serve the development.
The money is used to pay for public transport services, roads, traffic calming measures, sewers and community facilities such as playgrounds, museums, parking and parks.
The money sitting in bank accounts is ring-fenced for these purposes, and cannot be used to pay for day-to-day spending.
Fingal County Council has almost €50m in cash reserves. Dublin City Council has €12.9m, Limerick City has €7m, Cork City has €8.3m but Galway City has none.
The Department of the Environment defended the spending ban, but is to consider loosening the purse strings next year. "If we tell the local authorities they can spend it, it means they've less money on the books. This (ban) relates to limits on general government borrowing."