concern over €30 million council overdraft

Concern has been expressed about the scale of a €30 million overdraft for Clare County Council, which was approved at a recent local authority meeting.

This comes as the council has to deal with a potential deficit of €19.7 million as a result of the collapse of economic activity during the Covid-19 pandemic.

Having raised questions about the financial impact of Covid-19 on the local authority’s income, Councillor Pat Hayes said the size of this overdraft showed how the authority’s finances are under serious threat.

Councillor Hayes is concerned the council will lose a lot of income as a result of the lockdown from commercial rates, the Cliffs of Moher and parking, which should result in equivalent funding from the government to prevent cutbacks.

He said continuing with a €30 million overdraft over the coming years is not sustainable on an ongoing basis without additional government financial support.

“There is a major headache for local authorities in the future in terms of funding sources. Approval for the €30 million was needed to ensure the day-to-day running for the council for this year but this is unsustainable if there isn’t an extra allocation to meet the deficit.

“A lot of businesses are not going to re-open and the return from commercial rates will be lower, particularly in the hospitality sector.

“Where does the money come from if the council has to use even €15 million of the overdraft? If the council will not have the capability of raising money, the only other way is to reduce services.

“Local authorities need to be properly funded,” he said.

He recalled the council carried out storm damage work and wasn’t fully recouped from the government.
A combined total of €175 million was spent in the revenue and capital account in delivering services and achieving a number of important developments in the areas of transport, housing, community and enterprise last year.

The council recorded a surplus of €0.08 million compared with the adopted budget. When the amortisation of the corporate loan of €0.45 million is included, the result is €0.54 million positive for the year.
This continues the trend of recent years with a closing cumulative position of €2.5 million.

Responding to Clare Champion queries, the council stressed it is important to note that the €30 million overdraft facility approved by the authority will only be used where necessary to continue to meet the cost in the provision of services.

In 2020, the council has a balanced budget that it is operating to, however, like other businesses the authority is experiencing cash flow implications arising from a reduction in income such as commercial rates and other goods and services.

A council spokesman told the Clare Champion it is working closely with its parent department and colleagues in the local authority sector on the impact of Covid-19 financially on all councils across the country.

“This has resulted in a three-month rates waiver scheme and also the business restart scheme to be announced. The sector continues to outline to government the commercial rates impact beyond the three-month waiver on a number of sectors and the serious need that full compensation is paid to local authorities for the loss of this income.

“The council await further detail on this in the coming weeks,” he said.

 

Dan Danaher