Councils must find cash for pay hikes

Cash-strapped local authorities have to find millions of euro from their own resources to restore public servants’ pay.

It follows confirmation that the Government is not reimbursing local authorities for additional payroll costs they face after the pay restoration timeline was brought forward by five months.

Cork City Council, which hiked business rates last December as part of a package of measures to balance its books, is now facing an additional payroll bill of €575,000.

Cork Sinn Féin Cllr Chris O’Leary said it is another example of local authorities having to carry the financial burden of decisions made by central Government: “Every year, local authorities are hit in the pocket by something which has been decided by central Government. And this is another example of a decision squeezing local government for more money.

The Government cut public pay through emergency FEMPI legislation introduced during the economic crash. However, as the economy recovered, unions negotiated pay restoration, initially through the 2015 Lansdowne Road deal. It resulted in a €1,000-a-year restoration, worth €38.33 a fortnight before tax, to all public servants who earn €65,000 a year or less. The increase was originally scheduled to be introduced from September 1, 2017.

Those earning above €65,000 should see the start of restoration of the Haddington Road pay reductions this month. However, following negotiations on foot of two Garda pay settlements at the end of last year, the restoration date was brought forward by five months, to April 1.

Cork City Council’s head of finance, John Hallahan, told councillors this week that as the city prepared its 2017 budget last December, they had provided for the additional cost of pay restoration from September 1 and December 31, 2017.

But he revealed the decision to bring forward the restoration date to April 1 has landed the council with an additional payroll cost of some €575,000. He said the Department of Local Government is “currently advising” that it will not reimburse the council for this additional payroll cost for the period April 1 to August 31. He said officials are in “consultation” with the department to have the additional costs reimbursed.

Cllr O’Leary said ministers have been quick to accuse local authorities of dragging their heels on the delivery of social housing while at the same time not providing councils with the funding to do so: “Yet here we have a decision that is going to cost local authorities hundreds of thousands of euro each — the bill will run to millions nationwide. We in Cork City Council agreed our budget in December, but here we are now, five months later, facing an additional cost of almost €600,000.”

Impact general secretary Shay Cody said there is still a long way to go before crisis-era income cuts are reversed: “We will be in talks in the early summer with the objective of agreeing a definitive timescale to unwind the cuts introduced under the ‘FEMPI’ legislation.”

The pay talks will be triggered after the Public Service Pay Commission issues its initial report this month.