Cork County Council faces service cuts as rates income falls 20% 

Cork County Council faces service cuts as rates income falls 20% 

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Cork County Council is facing a loss of €22.75m or 20% of its total rates income this year as more than 75% of businesses in the region qualified for a Covid-19 rates waiver.

The council is now facing a "very challenging" forthcoming budget due to the shortfall.

Its chief executive, Tim Lucey, has estimated that although most businesses will reopen soon, some will have closed forever, reducing the rates income, and others will struggle to pay.

In addition, he said the council has lost significant income from parking charges it waived, from swimming pools closed during the lockdown, and from tourist attractions it runs, such as Spike Island.

He said the council has also had to spend a significant amount of money on providing PPE to employees and sanitising offices and public areas it is responsible for throughout the county.

Mr Lucey told the Irish Examiner he believes all these combined, plus increased pension and wage costs, will leave the council with a deficit in its forthcoming budget of €19m.

The council expenditure budget is €330m, but after factoring in wages, pensions, loans etc, Mr Lucey said it has “discretionary expenditure in the region of €40m". 

“Therefore we're looking at 50% cuts to that,” he said.

The council's current financial situation is a far cry from last year when it took in a record near €124m in commercial rates – up €30m on 10 years ago.

Privately, many councillors are saying they expect serious cuts to services across the board and/or an increase in LPT (Local Property Tax) for householders in the county, unless the government steps in with significant financial aid.

County councillors will meet today to start deliberations on the LPT rates for next year. The tax will be a vital component in providing income for their annual budget for 2021, which will be hammered out at meetings in November.

“Our budget for 2021 is going to stretch us and we face significant challenges to balance our budget,” Mr Lucey said.

By contrast €123.9m was collected in rates by the local authority last year. It took in €90m in 2009.

The council's head of finance, Lorraine O'Neill, said they'd substantially eroded arrears over the past five years from €28.2m to €9.5m and last year had a 93% collection rate.

However, she also pointed out that “the situation for 2021 will be challenging and very difficult to predict what impact Covid-19 will have on it.” Income from commercial rates currently account for 39% of all council revenue.

The rent waiver applied to businesses from March 30 to Sept 30 and applies to businesses which had to close or can prove that their turnover during this period was down at least 25%.

Councillor Seamus McGrath, leader of Fianna Fáil on the council, said Covid-19 has had a very significant impact on the council's income for 2020 and this will undoubtedly continue into 2021.

“We are now getting down to the detailed financial assessment in the run up to the LPT and budgetary decisions for 2021. Support from national government has been good so far, but we will need more to enable us to maintain services at an acceptable level,” Mr McGrath said.

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