The Government must consider a ‘bank-style bailout’ for a local authority burdened with almost €3m in property tax liabilities and new loan repayments as it tries to prepare its 2014 budget.
The call came from Cllr Sean Martin (FF) last night who warned that the scale of the financial difficulties facing Cork City Council ahead of its Dec 16 budget meeting is far worse than people realise.
As reported in the Irish Examiner in recent days, the council is trying to prepare its budget for next year against the backdrop of a €400,000 property tax bill on its housing stock for this year, and an €800,000 bill for next year.
The council must find €700,000 for the National Finance Agency to repay interest on loans linked to the purchase of landbanks for housing during the boom years. The lands remain undeveloped. The council is also expected to find €1.2m for capital repayments on those loans.
This is coupled with sharp falls in the council’s usual income streams — including a €400,000 drop in pay-parking income — combined with cuts in government funding and grants.
The council is also waiting for confirmation on the level of funding it will receive through the Local Government Fund.
Rent increases for council tenants of up to €100 a year are being considered to help bridge what is expected to be a €4m shortfall.
Councillors from all parties expressed serious concerns about the scale of the difficulties. Some are privately concerned that several members of government parties may not support the budget.
Mr Martin said a national political response is required.
“[Environment] Minister Phil Hogan wants this and other councils to be tax vibrant instead of being able to provide vital services to the community,” he said.
“The banks have been bailed out to the tune of €64bn. Surely the Government came come up with something for this local authority.”
Cllr John Buttimer (FG) said everything is on the table. “Out of a total budget of about €170m, we have between €25m to €30m discretionary spending and we’ll have to find the savings in that.
“Rent increases are on the table but that option will have to be reviewed economically and politically.”
It is understood that management and councillors are reluctant to increase commercial rates, at a time when the economy is showing tentative signs of a recovery.
Worker’s Party Cllr Ted Tynan warned there will be strong opposition to any attempt to hike council tenants’ rents. “The proposal to pass on property tax to council tenants exposes the true nature of this tax. “This is not a property tax but rather a tax on the family home since non-property owners are now expected to pay. Secondly it demolishes the Government’s claim that the property tax is about funding local government.
“This is ludicrous when local government itself is levied with this tax and seeks to pass the charge on to its tenants.”
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