CLARE County Council will face a major financial headache trying to balance its books next month following confirmation the authority is facing a €12.6 million deficit in funding due to the catastrophic economic impact of Covid-19.
The grim financial situation facing the council was laid bare this week after it emerged the projected loss of income from commercial rates will total €5 million, €5.6 million will be missing from other income that is normally generated, while an additional €2 million had to be spent on unplanned public health measures.
The major financial challenge facing the council was raised by Councillor Pat McMahon at a recent local authority meeting when he asked chief executive Pat Dowling to outline the financial impact of Covid-19 on the operations of the council and the council’s interactions with other bodies and agencies.
Councillor McMahon stressed it will be vital to seek substantial government support as no local authority could sustain this shortfall.
Commenting on the local economy, he said hundreds of people have lost their jobs or were on reduced wages due to short time.
He said it is very difficult trying to run a business as a result of Covid-19 restrictions.
Councillor Johnny Flynn acknowledged it will be extremely difficult to balance the books for the Budget Estimates next month.
“Clare County Council has done very well over the last few years getting balanced budgets without any need for borrowing. The council had a small surplus last year. To get a balanced budget will be very difficult without direct Government funding to fund the €12.6 million shortfall.
“We will be hoping the government covers this shortfall. The Budget announced on Tuesday is very strongly supportive of trying to keep small and medium enterprises, which employ the bulk of people in this country.
“We hope there may be a supplementary Budget (Government) towards the end of the year, which would look at supporting local government,” he said.
Head of Finance, Noeleen Fitzgerald acknowledged the immediate and severe financial challenges for the council presented by Covid-19 and the resulting economic impact and restrictions on business activity in the county could not have been foreseen or indeed planned for.
“Covid-19 has brought about extraordinary financial and cash flow impacts in the areas of commercial rates, income from goods and services and additional expenditure incurred in responding to the pandemic crisis.”
She confirmed the financial shock to businesses in Clare and its impact on the ability to meet the commercial rates demand for 2020 has been calculated as €19.7m annualised income.
This represents about 15% of the annual revenue budget based on a thorough review of the commercial rates business profile, highlighting areas of aviation, hospitality and retail accounting in excess of €10 million.
When the €19.7 million is adjusted for the vacancy property credit and the July Stimulus six- month commercial rates waiver, the impact in 2020 is forecast at €5 million.
In the Budget 2020, there is €13.3 million (10%) income budgeted under a range of headings – parking charges, road opening licences, planning receipts, civic amenity sites, litter fines, fire safety control, library receipts, leisure/tourism facilities and casual trading.
When these income areas were reviewed in June 2020, an annualised impact of €5.6 million was calculated.
Ms Fitzgerald pointed out these calculations will have to be revised, if it becomes necessary to impose further restrictions, and noted no subvention has been announced from national government.
The council also incurred €2 million in exceptional public health costs dealing with the Covid-19 emergency and maintaining essential services during the lockdown.
“Other income sources will also experience an impact in a time delay in payment as we reopen businesses and society especially in the area of housing rents and loans. The ability to continue the match funding of capital projects remains under review with ongoing discussing with grant funding bodies.
“The Covid-19 crisis will affect our financial situation over a period of years rather than contained in 2020. The preparation of the Draft Budget 2021 will present additional challenges as we monitor the impact of this pandemic and the recovery of the economy locally.
“The establishment by the Council of the Clare Economic Task Force is an effort to assemble private and public sector leaders in order to inform and guide economic measures that will stimulate future job creation in Clare,” she stated.