Additional funds for Cork City Council over boundary extension ruled out

Minister for Local Government Darragh O’Brien has ruled out extra funding for Cork City Council.

The Minister for Local Government has ruled out extra funding to help Cork City Council deal with the potentially crippling €22m index-linked compensation payments crisis it faces arising out of its 2019 city boundary extension.

Darragh O’Brien described it as an “exceptional issue” that should be dealt with by the implementation oversight committee (IOC) — a special three-person group that was established to oversee the boundary extension process.

However, almost four years on from the boundary extension, the operational and legal status of the IOC is unclear, with the minister now facing calls to explain how the council should proceed.

Fine Gael Cllr Shane O’Callaghan, who first raised this issue last November, said the department has “short-changed” the city council.

“Minister O’Brien is the minister responsible — the buck stops with him,” he said.

“He must personally intervene to ensure that millions of euro of extra baseline funding is allocated to Cork City Council. 

"If he fails to intervene soon, this is likely to become an election issue, and rightly so.” 

Inflation

Under the terms of the boundary extension, the city has to pay an annual index-linked contribution of some €13.5m to the county council for at least 10 years, with the first payment made in 2020.

The city argued, unsuccessfully, against index-linking the payments and last November, the Irish Examiner first reported how soaring inflation has seen the annual payment surge to €15.4m this year, with fears the index-linking element alone could add €22m to the overall cost of the payments over a decade.

Cork City Council chief executive Ann Doherty.

“This is not a sustainable cost for Cork City Council,” City Council chief executive, Ann Doherty, told councillors.

The council agreed to write to the minister setting out the problem and asking for a review of its funding allocation under the Local Property Tax (LPT) model, arguing that when the model was reviewed last year, no account was taken of the city’s annual compensation charge.

The city said it is difficult to comprehend how it got an increase in its LPT baseline funding of €1.5m — the minimum increase available to all local authorities — while the county got an extra €10m.

In his response, the minister said when his department reviewed the LPT baseline funding criteria as they apply to the city, it was found that there would still be no increase in the allocation.

“Exceptional issues arising in any local authority, such as the financial arrangements associated with the 2019 boundary extension, are outside the remit of the review and cannot be dealt with in terms of the LPT baseline allocation,” he said.

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He said any concerns should be referred to the oversight committee.

But Mr O'Callaghan said the minister's claim that the compensation issue would not have made any difference to the city's funding allocation does not stand up to scrutiny.

“The fact is that the city council is being shortchanged by millions of euro in baseline funding — funding that could be spent on things like supports for small and medium enterprises, estate road and footpath resurfacing and housing maintenance," he said.

“The Minister can’t simply wash his hands of the issue by suggesting that it be considered by a defunct oversight committee, which probably hasn’t functioned for years.”