I thank the Cathaoirleach for selecting this Commencement matter. I welcome the Minister of State, Deputy Noonan, to the House. I know the Minister of State, Deputy Peter Burke, has recently engaged with councillors on a cross-party basis on the issue of funding for Galway County Council. Obviously, they are better placed than I am to put forward the case. As I understand it, the amalgamation of the city and county councils is off the table, so there is no point in talking about the merits or demerits of that.

Funding of Galway County Council has been an issue for some time but, particularly, since the economic crash of 2008-2009. Realistically, however, it has been an issue for more than 20 years, particularly in comparison with other local authorities. If one looks at the tables of funding going back to 1999, there has been an anomaly in relation to funding for Galway County Council.

Galway County Council has a low rates base, as the city is in a separate authority, and pulls in so much investment. Compared with Mayo, which has large towns such as Castlebar, Westport and Ballina, we have much smaller towns with a lower rates base. Similarly, Shannon and Ennis in Clare are drivers while in Kerry, Killarney and Tralee are good drivers of the economy and provide a good rates base. The budget of Galway County Council in 2021 is €136.5 million. In comparison, Mayo’s budget is €159 million, Kerry’s is €168 million and Tipperary’s is €185 million. I certainly do not begrudge any other local authority what they receive or what they are able to generate but the truth is that Galway has not got the capacity to grow its rates, in particular, because of the influence of the city.

In regard to staffing in Galway, according to the 2009 figures, Galway County Council had 767 staff, Mayo had 1,000, Kerry had 1,153 and Tipperary had 1,034. Clearly, in terms of funding, and the consequence of that, which is staffing, Galway County Council is at a lower level than other comparative local authorities. That has an impact on the provision of services. It is totally unsustainable and it cannot continue in this fashion.

The councillors, in fairness, were the first to increase the local property tax to try to fund a shortfall. They got no thanks for that from the Department. Indeed, the Department ignored the gesture. It did not look at providing any additional funding. In fact, the Department has starved Galway for more than 20 years. The carrot of improved funding that would come with amalgamation was dangled, but even with that, there was no clear indication of additional funding.

The position of chief executive officer was left unfilled for seven years. For seven years, there was an acting CEO in Galway. I take responsibility in that regard. We were in government for that period, but that was position was left unfilled. Would the position of Secretary General or assistant secretary general in the Department of Housing, Local Government and Heritage be left unfilled for seven years? I do not think so. It would not be left unfilled for seven weeks.

Clearly, there have been certain issues and anomalies regarding the funding of Galway County Council. When we approached officials in the Department – again on a cross-party basis – a number of years ago, there was an admission that Galway had been badly served for a long number of years in comparison to similar local authorities, some of which are our near neighbours. However, there has been no resolution to that. There has been no additional funding. The then Minister of State, Deputy John Paul Phelan, provided an extra, I think, €1 million, which eventually came through, based on issues surrounding the municipal districts, to try to improve the situation.

We have a stark situation in Galway. The Minister of State, Deputy Noonan’s officials have been aware of this matter for a long number of years and yet nothing has been provided for Galway. I look forward to the Minister of State’s reply.

Minister of State at the Department of Housing, Local Government and Heritage (Deputy Malcolm Noonan)

The case was very well made by the Senator. The funding system for local authorities is complex, with authorities deriving their income from a variety of sources, including commercial rates, charges for goods and services, and funding from central Government. Local authorities vary significantly from one another in terms of size, population, population distribution, public service demands, infrastructure and other income sources. All of these factors should be taken into account when comparing levels of funding for different local authority areas. Most of the funding from central Government must be used for specified services. This can be grouped into five broad programme categories: recreation, education, environment, housing and transport.

Across all schemes and funding sources, the Department of Housing, Local Government and Heritage provided €51.1 million and €82.9 million to Galway County Council in 2019 and 2020, respectively. The increase between 2019 and 2020 is due to an increase in housing funding, as well as funding in respect of the Covid-19 rates waiver and other Covid-19 related expenses that occurred in 2020.

It is a matter for each local authority to consider how it can maximise local income sources and manage its own spending in the context of the annual budgetary process. Local authority members may decide, as part as of the process, to vary annual rate of valuation, ARV, and local property tax, LPT, in order to increase revenue available to them. I understand that Galway County Council has opted not to use these tools for many years.

The power to vary the local property tax is a reserved function. Local authorities must balance with these priorities against available resources. To achieve that balance, the elected members must make informed and necessary choices to balance the level of service provision with the available income. For 2021, 22 of the local authorities throughout the country opted to vary the local property tax upwards, while only three have opted to vary it downwards.

Arising from the variation decisions, the local authority sector will gain an additional €11.5 million from the LPT when compared with 2020.

Galway County Council would have gained an additional €2.2 million if it had applied the maximum upward variation of 15% for 2021. Galway elected members decided not to vary the LPT rate for 2021, thereby denying themselves additional discretionary income. The Department does not, as a matter of course, provide supplementary funding to local authorities in lieu of the LPT changes. Doing so would undermine one of the reasons the LPT was introduced, namely, to strengthen the link between the decision-making of elected members of local authorities and services provided in the area. This has consistently been the position since 2015.

The programme for Government, Our Shared Future, commits to bringing about reforms in the workings of the local property tax. These reforms will involve bringing new homes, which are currently exempt from the tax, into the taxation system, as well as providing for all money collected locally to be retained within that county. This will also be done on the basis that those counties with a lower LPT base are adjusted via an annual national equalisation fund paid from the Exchequer, as is currently the case. The Minister for Finance is examining options for reform of the LPT in light of the 2019 interdepartmental LPT review report, the views of the Committee on Budgetary Oversight and the programme for Government commitments.

On 13 April 2021, my colleague in the Department, the Minister of State, Deputy Peter Burke, met a delegation from Galway County Council and agreed the Department will work with the council to explore the options available to putting its finances on a more sustainable footing. Preliminary work is under way in the Department and I understand that efforts in this regard will intensify in the run-up to the local authority budgetary process later this year.

Notwithstanding all of what I have outlined, Galway County Council was given an exceptional allocation of €1 million to support the municipal districts in 2021 and to be distributed equally among them. This was a significant commitment by the Government in supporting the council, which, coupled with the more general Covid-19 related supports provided in both 2020 and thus far this year, represents significant financial support for the council and the wider local government sector.

Senator Seán Kyne

When Galway County Council increased the LPT – it was one of the first local authorities to do so – it was done on the basis that the Department would come with it some of the way, but it did not do that. While one could argue it would have gained an additional €2.2 million by increasing the LPT, I return to the comparisons. Galway County Council’s budget for this year is €136 million, while the budgets of the local authorities in Mayo, Kerry and Tipperary are €159 million, €168 million and €185 million, respectively. An additional €2 million, while welcome, would not fill those gaps.

There is a fundamental issue with the model of funding for Galway County Council, as has been conceded by officials in the Department. In fact, they went on to say that the initial model, which dates from more than 20 years ago, is so complex that they do not know which model is used to decide where funding derives from. While Galway County Council has a certain ability to raise additional funding itself, the direct grants it receives from the Department are insufficient for the needs of a county that is the fifth largest by population. The funding we receive is up to the third lowest per capita. There is a serious anomaly in regard to funding for Galway County Council and I ask that the Minister of State’s officials address that in a serious fashion.

Deputy Malcolm Noonan

I note the concerns of the Senator. Every local authority is facing similar challenges. We can look towards the budgetary process for 2022, whereby elected members can again give consideration to the LPT, which is a mechanism that can be used.

I reiterate that the Minister of State, Deputy Burke, is committed to working with Galway County Council to try to resolve these issues, notwithstanding the significant pressures on local government and the recognition that local government, through the community call, has been front and centre of dealing with the Covid pandemic. That has been recognised by the Department in a measured way that supports local authorities to continue to do that valuable work and provide the valuable services they do to the community. That has been highlighted throughout the pandemic.

I will convey the Senator’s concerns to the Minister of State, Deputy Burke. He is firmly committed to resolving these issues over the lifetime of the Government.