Councils cannot spend €1.2bn in levies

CASH-strapped local authorities have been forced to store away €1.2 billion of development levies which could be used for public services like water and parks because of how the Government is applying EU budget rules.

As local councils struggle with funding reductions, the Government said it will examine ways of freeing up this money which was put in reserve to make Ireland’s deficit look smaller for the EU’s Growth and Stability Pact.

The Government asked councils not to spend levies accumulated before 2009 so they can be used as reserves to reduce the Government’s budget deficit, which the EU requires stays below 3% of GDP.

The Government said it is only sticking to rules imposed by the Maastricht Treaty, but the opposition said it is just a “book-balancing exercise” for which local services are suffering.

Junior minister at the Department of the Environment, Ciarán Cuffe, said local authorities “are not using up certain monies because of the Maastricht criteria and we’re hoping that there might be some relaxation on that. Obviously, the money is sitting there, we want to use it, and if we can find a legal and sound way of doing it we will.”

Labour’s housing spokesman Ciarán Lynch said the money is locked into accounts because “local authorities have been instructed that they are not to spend it as part of a book balancing exercise in order that we meet the criteria as set out by Maastricht”.

“This is money collected from developers to do specific work. It was captured for the improvement of local areas and to be spent improving water services, recreational areas and other such public works.”

Meanwhile, local authorities have begun legal proceedings against 60 developers who have failed to pay levies. Some €850m is owed in total.

Mr Cuffe said there is a “significant shortfall” but local authorities are doing everything they can to recoup the money.

“There is up to 200 staff at local authority level occupied full-time in collecting development levies. There are about 50 cases at various stages of legal proceedings in Fingal, Dublin City Council has issued nearly 100 warning letters with 10 court referrals,” he said.

Secretary general of the Department of the Environment, Geraldine Tallon, told a recent Public Accounts Committee (PAC) meeting that while local authorities must make an effort to secure as much of these payments as possible “we have to be conscious that development contributions are a significant potential burden on new activity seeking to locate in particular areas”.

She said representations have been made arguing that “development contributions are a cost to competitiveness” and “something of an impediment to economic recovery”.

She said: “We are looking to authorities to be reasonably flexible.”