Parliamentary Question addressed to the Minister for Environment, Community and Local Government

To ask the Minister for the Environment, Community and Local Government the restrictions in terms of categories of spending by local authorities, that have been applied to moneys raised from local property tax; the minimum or maximum spending caps that have been applied to the various spending categories; and if he will make a statement on the matter?

Reply

Local Property Tax was introduced to provide an alternative, stable and sustainable funding base for the local authority sector, providing greater levels of connection between local revenue raising and associated expenditure decisions. Given that local authorities vary significantly from one another in terms of size, population, public service demands, infrastructure and income sources, the Government has decided that no local authority will receive less income from LPT in 2015 than they received for General Purpose Grants (GPGs) from the Local Government Fund in 2014. Certain local authorities, with stronger property bases, will receive greater levels of funding from local retention of LPT in 2015 than they received from the Local Government Fund in 2014.

The Government has decided that these latter local authorities will use this surplus funding in two ways, with a portion available for their own discretionary purposes and the remainder, if any, to fund somelocalservices in the Housing and Roads areas for which they currently receive Central Government funding. The portion that will be retained for discretionary purposesby these authoritieswill be an amount equal to 20% of the total expected LPT income in the relevant local authority area (before any decision to vary rates) or, in the case where that surplus will be less than 20%, the full amount.

Accordingly, 10 local authorities will receive higher levels of LPT income in 2015 compared to GPG funding in 2014 that will enable them to fund local services of up to €131.7m in the Housing and €21.7m in the Roads areas,respectively,and,therefore,free up some Central Government funding for other purposes. Those local authorities are – Clare, Cork County, Dún Laoghaire Rathdown, Dublin City, Fingal, Galway City, Kildare, Meath, South Dublin and Wicklow. I have advised all local authorities of their individual provisional LPT allocations, totalling €458.9m,for 2015, of which up to €153.4m is ring fenced to fund    local services in the Housing and Roads areas by the 10 local authorities as outlined above. Further details in relation to the specific obligations that my Department will seek to be satisfied from these self-funding levels in the Housing area will be provided as part of the overall Housing grant allocations process for 2015, which will be completed in due course. It is a matter for the individual local authorities to decide how to spend the remaining €305.5m,in the context of the annual budgetary process having regard to both locally identified needs and available resources.

The decision to allow local authorities to retain 80% of LPT locally and the power to vary LPT rates will facilitate further implementation of the overall objective of the local government reform programme, which isto achievegreater devolution to the local government sector, through supporting enhanced local decision making on spending priorities.