City management proposed the hike — the first in eight years — in a bid to plug a projected deficit of €1.6m. City head of finance John Hallihan said management would prefer not to hike rates but has no other option.
“The last thing we want to do is to put up the rates but there are several factors driving this,” he said.
“2009 was the last time we increased the rates. Since then, there has been a 25% reduction in staff costs, we cut costs and achieved efficiencies across the organisation, and we took chunks out of our reserves. But that reserve is almost gone and we just can’t absorb the costs any longer.”
Mr Hallihan said management has proposed the increase against the backdrop of several Government decisions, including:
- Changes in administration of central Government’s block grant, now called the restoration improvement programme for roads resurfacing, which will cost the council about €1.1m;
- A reduction in the rates income following a global utilities rates review, which will cost the council in the region of €1.035m;
- The centralisation of all local authority payroll systems, which will cost the council €188,000;
- The removal from local authorities of an Irish Water billing function for commercial and industrial water customers, which will cost the council some €190,000;
- Increased pension costs in the order of €350,000.
Management has prepared the draft budget with the assumption central Government will reimburse €711,000 to the city to cover a rates exemption for Irish Water Networks, and the €895,000 associated with staff pay increments due next year under the Haddington Road and Lansdowne Road deals.
The council must also pay €707,000 in local property tax on its 8,900 local authority homes next year. There are around 3,500 commercial ratepayers in the city, whose rates account for 44% of the city council’s income. Almost three-quarters (72%) have an annual rates liability of under €20,000.
If the full 2.9% rates hike is sanctioned, a ratepayer with a €1,000 annual rates bill will pay an extra €29 a year; someone with a €10,000 rates bill will pay €290 more, while those with a €20,000 rates bill will pay €580 more.
Fianna Fáil councillor Ken O’Flynn said he fears the 2.9% hike will bankrupt traders who just about survived the recession.
“We can’t be in a situation where you are in recovery, and then hit businesses with bill increases like this. What the city should be doing is introducing a rates amnesty,” he said.
Party colleague Terry Shannon pointed out that Government decisions like the global rates revaluation and centralising local authority payroll systems, have cost the city dearly.
“There is no appetite on the part of my group to increase the burden on small business. As far as we are concerned, this is a non-runner. Management will have to find the money elsewhere,” he said.
The budget meeting takes place on November 16.