Service cuts fears as city tackles €10m deficit

LIMERICK City Council is €10 million in the red, a four-fold increase in the space of a year.

News of the huge deficit emerged yesterday amid fears that the city's householders will suffer cuts in services as a result and businesses could eventually be forced to foot the bill with punishing hikes in rates.

City manager Tom Mackey acknowledged that the city was facing one of its worst financial crises and would have to seriously tighten its belt.

"Tough decisions will have to be taken to rectify this serious financial crisis and reduce the deficit to manageable proportions," he warned yesterday.

The full extent of the crisis was revealed as financial figures showed that the city's day-to-day revenue account was more than €10 million in debt.

According to Fine Gael councillor Diarmuid Scully, the real situation is even worse with the city's overdraft climbing from €2.5m to €18m a staggering rise of 700%.

When all sources of revenue including rates and rents are taken into account, the figure is reduced to around €10m.

"The situation is getting out of control and the business people of Limerick are facing the possibility of a huge hike in rates," warned Mr Scully.

Thousands of hard-pressed householders also face the prospect of cutbacks in services in order to reduce the council's deficit to manageable proportions.

Mr Mackey confirmed that the city was not in a good financial state. "We need to cut our cloth according to our measure."

He pointed out that the 10m deficit was the accumulative effect of expenditure exceeding income on important projects over the past few years.

Limerick is not alone in facing a crisis in its finances. Last week it emerged that other councils throughout the country faced similar growing deficits.

However, the full extent of their financial straits is not known because most councils failed to file accounts on time.

All but five of the country's 88 local authorities are breaking the law by failing to file last year's accounts before the legally required deadline, with seven councils failing to file accounts from 2001.

Under the Local Government Act, county, city and town councils must prepare annual financial statements by April 1.

However, most councils have still not filed accounts, almost two months after this year's deadline.

Seven local authorities have not only failed to file accounts from last year but still have not filed accounts from two years ago.

Three local authorities Fingal County Council, South Dublin County Council and Birr Town Council are now three years late, according to the Department of the Environment's figures.

A spokesman for Environment Minister Martin Cullen said: "They are late and the minister is dissatisfied with them."

Many councils blamed the delay on a new nationwide financial system.