Cork council could be forced to cut services to balance books after Covid-19 impact

Cork County Council has lost income from pay parking and tourism initiatives and had to spend extra on Covid-19 services, with no indication yet that central government will compensate for this
Cork council could be forced to cut services to balance books after Covid-19 impact

Cork County Council may be forced to cut services if it isn't compensated for Covid-related spending, it has warned. Pictured is Cobh, Co Cork. Picture: Larry Cummins

Cork County Council will be faced with digging into its reserves or cutting some services next year and will find it difficult to bring in the rates it is owed by some struggling businesses. That's unless the government comes to its aid and bails it out.

The local authority has spent more money on Covid-19 safety measures than previously budgeted for and has lost income from pay parking and the operation of its tourist facilities as a result of the pandemic.

Loraine Lynch, the council's head of finance, said Covid-19 measures, such as the creation of outdoor community areas, increased street cleaning, public spaces management and extending remote working and remote meetings had cost money not budgeted for.

It also lost income because municipal districts suspended pay parking and it didn't generate budgeted revenue from visitor centres like Michael Collins House, Clonakilty.

The majority of towns which suspended pay parking have not yet reintroduced it.

Further revenue was lost for several months because its three municipal-run swimming pools in Fermoy, Mallow and Dunmanway were closed due to Covid-19 restrictions.

In the first six months of this year these in total accounted for a €2m loss and Ms Lynch said by the end of the year the local authority will have spent up to €4m extra than it had budgeted for.

“Last year we incurred an additional €6.7m which we hadn't budgeted for, but we were fully compensated by the government. As yet there is no indication (from government) that we are going to be compensated for the additional overspend this year,” Ms Lynch said.

To balance its own 2021 budget, the county council used €4m of its reserves.

Ms Lynch said “in a worse case scenario” the local authority faces the prospect of having to dip into the remaining reserves, or it may have to cut some services, if no government bail-out is forthcoming.

In addition, the council is having to deal with increased costs of labour and materials which are impacting on its housing and roads budgets.

Ms Lynch said it is unlikely that any cuts to services would be imposed this year and if a decision on that needs to be taken it won't happen until 2022.

To add to its financial difficulties, Ms Lynch admitted that it will not be easy trying to recoup some rates owed by certain businesses, especially those in the hospitality sector, which are still not fully up to speed.

“As supports are pulled back from businesses they're going to have difficulty with cash flow. We do see difficulties getting what we're owed and it is likely to take longer to recoup some of it,” Ms Lynch said.

The difficulty is compounded, she said, because last year 74% of its ratepayers got a waiver from the government.

This year that figure has dropped to just 41%.

The 2021 waiver is significantly more restrictive than that of 2020 and this will have an impact on the year-end collection figures and increase the requirement for bad debt provision for the council's own budget next year.

On a positive note, however, the council is expecting to collect a near-normal amount of rents it is owed by its tenants this year, which is good news considering many people lost their jobs due to the pandemic.

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