Cork councillors asks for €10m emergency State funding to cope with boundary extension payment

Soaring inflation has led to a massive increase in the annual payment to Cork County Council, which will top €15.4m this year

Local Government Minister Darragh O’Brien: Councillors to ask the minister to direct his department to make an annual €2m payment for next five years to alleviate the crippling inflation associated with the annual payment to the county council. Picture: Sasko Lazarov/© RollingNews.ie

Cork City is asking the Government to sanction €10m in emergency funding to help it cope with potentially crippling index-linked compensation payments crisis arising out of the 2019 city boundary extension.

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

But soaring inflation led to a massive increase in the annual payment, which will top €15.4m this year.

City councillors unanimously backed the €10m Government request after a motion tabled by Fine Gael councillor Shane O’Callaghan, who branded the situation facing the city “a farce”.

The index-linking element alone could add €22m to the overall cost of the compensation payments over a decade.

Mr O'Callaghan's call came after it emerged the group Local Government Minister Darragh O’Brien suggested should review the soaring payments issue — a three-person implementation oversight committee to oversee any complaints arising out of the boundary extension — had not been active since the boundary extension took effect, had no membership, and effectively no longer existed.

Mr O’Callaghan said the minister had to deal with this issue now, warning inflation had added €3m to the city's annual compensation payments to the county council.

“We have a situation whereby Minister O’Brien recommended that the city council refer its concerns to an oversight committee and when we enquired how to go about doing that, the response was that it no longer exists,” he said. 

“In my opinion, there is only one word for that — and it’s ‘farce’.” 

He stressed he was not criticising Fianna Fáil city councillors, who he said had been trying to find a resolution to this, but he said the indications were that Mr O’Brien was not taking this issue seriously.

“Which is unfortunate for this city council because it results in us continuing to pay €3m in inflation per year,” he said.

It’s also unfortunate for the people of Cork because that €3m could be spent on footpath resurfacing, statues, housing maintenance or supports for small to medium enterprises. 

"The time has come for Minister O’Brien to stop messing about on this issue.” 

Councillors backed his amended motion which will see the council asking the minister to direct the Department of Local Government to make an annual €2m payment for next five years to alleviate the crippling inflation associated with the annual payment to the county council.

City officials, who argued unsuccessfully against the index-linking of payments, say the council was not opposed to making the annual compensation payments, but soaring inflation had made it unsustainable.

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The council has also argued that when the Local Property Tax (LPT) funding allocation model was being reviewed last year, no account was taken of the compensation issue.

Officials told the minister it was difficult to comprehend how the city council got an increase in its LPT baseline funding of just €1.5m — the minimum increase available to all local authorities — while the county council got an extra €10m, given the city is compensating the county to the tune of around €15m a year.

But the minister has ruled out providing any additional LPT funding to the city council.