Huge hike in service charges on way

HOUSEHOLDERS and businesses face a major hike in service charges next year to fund the €277 million rise in public servants’ pay.

Fine Gael claims this is first layer of local taxes being introduced by Environment Minister Martin Cullen.

More than 35,000 local authority workers are due a 20% pay rise sanctioned by the Government next year, but the minister will not give councils any extra money to finance this.

Local authorities will have no option but to drastically increase householders’ service charges and commercial rates to finance this crippling deficit, Fine Gael environment spokesman Bernard Allen said.

Some local authorities have already raised their service charges by 30% and commercial rates by up to 10%, and the remainder are due to bring in similar rises in the new year, according to Deputy Allen.

A Department of the Environment spokeswoman rejected the claim that this was a new layer of local taxes, but she did confirm that a major review of local government funding next year will consider the possibility of imposing local taxes.

The major rise in the local authorities’ pay bill next year is being caused by a 10.7% increase awarded under benchmarking; a 4% rise due under the last round of the Programme for Prosperity and Fairness (PPF) and a 7% increase under the Better Local Government scheme. And they also have to pay councillors for the first time, and this will cost €11 million.

The Department of Finance has confirmed that the local authorities’ pay bill for this year is expected to be about €1.23 billion.

Based on this figure, Fine Gael commissioned an accountant to cost the 21.7% rise in the local authorities’ pay bill for next year and the results showed that would come to €277 million. Mr Cullen has just removed the cap on the amount that businesses can be charged in commercial rates and the Chamber of Commerce of Ireland (CCI) believe they could be facing rises of up to 15%.

CCI chief executive John Dunne said while businesses are prepared to pay their fair share, they will not be scapegoated for pay awards made by central government. “We cannot be treated as a soft target for deficits just because local authorities have been starved of funding by the central exchequer,” Mr Dunne added.

Both Fine Gael and the CCI want the Department of the Environment to at least pay the benchmarking award. Many local authority managers have also made this request. Cork County Manager Maurice Moloney said benchmarking was a nationally determined once-off payment and should be funded by the Government.

The only funding local authorities get from central Government is the Local Government Grant (LGF) which amounts to about 20% of their annual budget. But next year this grant will be totally wiped out by funding these extra pay awards, Mr Moloney said.

And the 6.2% increase in the LGF for 2003 will be wiped out by inflation. “Even with increasing the rates and service charges we will have not option but to cut services because we are facing a €22 million pay bill,” the Cork County Manager said.

But a Department of the Environment spokeswoman said they did not anticipate any extra funding being given to local authorities and it was their remit to balance their budgets.

She said the LGF was increased to €623.3 million for next year and local authorities can also use commercial rates and services charges to raise funds. The spokeswoman said: “it is unlikely the authorities will get any extra money.”