Energy costs deliver shock to Clare County Council budget

SPIRALLING energy prices are providing an electric shock to Clare County Council after costs almost trebled from €2.5 million to about €6 million over the past year.

Outlining his Draft Budget 2023, Chief Executive, Pat Dowling has revealed there has been a 250% increase in electricity, fuel and gas up to a level of almost €6 million compared to €2.5 million in 2021.

This dramatic increase will only be partially covered by the government who will provide €1.9 million, leaving the council with a considerable shortfall.

Mr Dowling also confirmed a further provision of €0.45 million for a combination of energy savings, stabilisation of the market and or additional government supports has been budgeted for.

However, this is not confirmed and if the actual energy pricing materialises as forecast, without these additional supports, this will result in a deficit in the income budget for 2023.

The chief executive admitted it has been necessary to reduce expenditure in some areas with a focus on maintaining service provision.

“These budget reductions and assumptions on how the market will evolve in 2023 is different to anything experienced in a number of years,” said the CEO.

“There are also several emerging expenditure areas and demands that will have to be paused or deferred to future years to be revisited when this Council can provide for them.”

Businesses throughout Clare will welcome the fact there is no proposed increase in the annual rate of valuation of 75.76.

The decision to draft this budget with no increase was considered extensively with members of the Corporate Policy Group and the wider council and the recommendation was to adjust expenditure budget provisions of the council to not add additional commercial rates on an already challenged business sector.

There is no provision in the Draft Budget for the Shannon Heritage Due Diligence Project.

Commercial rates is projected to generate €41.4 million from 3,500 occupied properties in the county.

This income ranges from €24 for the lowest property to €8.7 million for the highest, 2% or 80 properties pay more than half of this annual demand in global utilities, energy generation, aviation, national retail and financial services.

On the lower end of this range, 1,850 properties or 52% of occupied properties are charged 2% of the total, generating €2.29 million.

The council’s total long-term loan funding at the end of 2021 was €83.5 million comprising mortgage loans of about €24 million, which have a corresponding income stream in long term debtors.

Non-mortgage loans at the end of 2022 are forecast to be €70.5 million with additional loans drawn in 2022 to fund the completion of the new Ennis Library Loan Fund, the council’s match funding element of the Loop Head and Vandeleur Phase One renovations under RRDF, and the advancement of the local authority housing planned maintenance programme of works.

“This level of long-term funding in a time of rising interest rates albeit an element has fixed rate contracts in place is a concern and does embed inherent risk into Draft Budget 2023.

“The Draft Budget does provide for some element of increase but certainly not to the level being forecast. A 1% interest movement on the total loan book represents a cost of €700,000.”

This budget provides for the repayment of loans to match fund the outcome of the RRDF grant application in Inis Cealtra, the URDF Phase Two, Ennis Public Realm and the Rural Waste Water programme.

There are some environment loans coming to an end and this provision remains for the funding of further environment related works ongoing in the county.

Detailed reports and requests for loan approvals will be presented to members next year.

The Draft Budget provides for €6.74 million of loan interest and principal charges over the level of €6.34 million in 2022. When adjusted for recoupable loans in water services, economic and tourism, the net impact on the accounts year on year is about €250,000.

This budget provides for payroll and pension costs across both streams of €52.5 million, which include current national pay agreements, while maximising recoupment costs.

Confirmation has been received that €7.4 million of the additional cumulative costs associated with the national pay agreements will be met centrally and recouped to the council by the Department of Housing, Local Government and Heritage.

This recoupment is an increased allocation of €3.2 million over that received in previous years.