Council may hike rents over property tax bill

Thousands of Cork City Council tenants could face rent hikes to help the local authority pay a €1.2m property tax bill.

The news emerged last night during a closed doors meeting between senior management and councillors, as talks begin on the preparation of the city’s budget for 2014.

Councillors were told the city is facing a €400,000 property tax bill on its housing stock for this year, and an €800,000 bill next year.

The property tax bill for 2014 makes up a large chunk of what’s likely to be a €4m shortfall the council must bridge in December’s budget.

The council is also facing a €720,000 interest payment on loan charges next year relating to the purchase of land during the boom.

Pay parking income is down €400,000, and the library service income is down €100,000.

It will cost €300,000 to stage the local elections; €400,000 has to be set aside to cover the cost of retiring councillors, or those who lose their seats next May; €250,000 is being set aside for the Gateway training programme; and a €150,000 Rapid grant has been scrapped.

While management hopes to make up to €1m savings in payroll costs, it must still bridge a €4m gap.

City manager Tim Lucey told the meeting the money would have to be found somewhere.

Several councillors expressed concerns that as well as cuts in services, it could mean rent increases for the council’s estimated 8,000 tenants of up to €2 a week — or €100 a year.

Socialist councillor Mick Barry said it was shaping up to be the most savage budget in the council’s history. “Any councillor who votes for €4m in cuts in December’s budget deserves to be sacked next May,” he said.

“Eight thousand council tenants in this city will be very angry indeed if the council goes down the road of hiking rents to pay the Government’s property tax.”

Cllr Ken O’Flynn (FF) said it was clear the Government has handed the bill for the property tax to local authorities. “They are expecting councillors to do their dirty work,” he said.

Cllr Mick Finn (Ind) described the context of the budget deliberations as like “robbing Peter to pay Peter”.

The property tax bill on its own housing stock is one of the key problems facing the council, he said.

“Because council tenants did not pay the tax in 2013, it effectively means that the council is being asked to pay €400,000 for the provision of local services that it provided itself,” he said.

“This is Benny Hill economics by central government, allocating taxpayers’ money on the one hand and taking it back in the other.”

Mr Finn has contacted the local government minister, calling for a stay on council exposure to property tax on its own housing stock until the matter is fully thought through after one full year of the tax being in operation. “It makes no sense for central government to be asking local authorities to pay property tax on its own stock and then scrambling to again fund these very authorities,” he said.

Councillors meet again next week to continue their preparations for the budget meeting on Dec 16.

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