Local Government Finance - Reform Jackie Maguire County Manager Leitrim County Council
Commitment to Local Gov Reform • Programme for Government , the Local Government Efficiency Review Group and the Report of the Local Government Alignment Steering Group……. Recognise and commit to the reform of local government
• Minister’s announcement awaited
Local Government Funding • Key part of the reform of Local Government is the revision of funding sources • Economic downturn further impetus for reform of local gov finanancing
Table 1: LGF 2006 - 2012 Year
Local Government Fund
Change % Change €m
2006
€m 877
2007
948
71
8.10%
2008
999
51
5.38%
2009
905
-94
-9.41%
2010
870
-35
-3.87%
2011
705
-165
-18.97%
2012
651
-54
-7.66%
2006-2012
-226
-25.77%
2008-2012
-348
-34.83%
Current Expenditure 2008 – 2012 2008
2009
2010
2011
2012
Reduction
Change %
€5,224
€5,237
€4,847
€4,724
€4,482
-€742
-14%
Commercial Rates
€1,341
€1,403
€1,357
€1,366
€1,399
€58
4%
Government Grants/Subsidies
€1,272
€1,255
€1,105
€1,129
€956
-€316
-25%
General Grant
Purpose
€1,000
€937
€774
€705
€645
-€355
-36%
Pension Deduction
Related
€0
€0
€79
€78
€79
€79
€1,600
€1,632
€1,518
€1,424
€1,380
-€220
Miscellaneous
€11
€10
€14
€22
€23
€12
Gross Income
€5,224
€5,237
€4,847
€4,724
€4,482
-€742
Gross Expenditure
Revenue
Financed by
Goods and Services
-14%
-14%
Revenue Expenditure by Division Gross Revenue Expenditure Movement 2008 - 2012
-€31
Housing & Building
-€270
Road Transport & Safety -€9
Water Services
-€68
Development Management
-€249
Environmental Services -€76
Culture, Recreation & Amentity -€93
Agriculture, Education, Health & Welfare €59
Miscellaneous Services
-€300m
-€200m
-€100m
€0m
€100m
What impacts Local Gov Finances ? • • • •
Service providers Various functions Size and structure Local democracy highlights need to have smaller la’s , though larger la.s are often more efficient….
• Irish Local Government appears to be poorly funded in comparison to other EU countries ……….. !
2008 Sources of Funding
Sources of Local Govt Funding 2012
• Reform of Local Government finance constant policy issue since 1960’s….. • 16 Reviews at least since the 1962 Economic Research Institute report ‘’ Local Government Finance in Ireland : A Preliminary Survey….
1985 The National Economic and Social Council The financing of Local Authorities. Local Property Tax would improve local accountability. Widen the National tax base. System of grants from Central government should be continued to cover national services at local level and to achieve an element of equalisation.
1985 The Commission on Taxation ďƒ˜ It reviewed the system of local government finance. ďƒ˜ It highlighted the importance of classifying the services provided by local authorities as either local or national. The Commission argued that local services should be financed primarily from local taxation.
1996 KPMG Report ďƒ˜ A KPMG Report in 1996 for the Department of the Environment, Heritage and Local Government noted that Ireland had a highly centralised system of financing of Local government . ďƒ˜In terms of funding options, the Report concluded that the commercial rates base should be extended to include all bed and breakfast accommodations and non residential agriculture buildings.
ďƒ˜It stated that there is scope to raise additional revenues from Local Authority charges. ďƒ˜ It suggested the introduction of a property tax as the most feasible option to raise additional funding.
2005 Indecon Report Highlighted the dependence of local Authorities on commercial rates and central grants and recommended a move towards more locally-based sources of funding. Two key elements of this should comprise
Increase in local charges Introduction of selected targeted local taxation including a charge on second properties.
Commission on Taxation 2009 • Examined various options for the future financing of local government • Seeks to change balance between nationally provided and locally collected sources of income from ratio 45:55 to 25:75 • Taxation of property (domestic and commercial) recommended as key source of local government income.
The Future …… • Property Tax 2013……….????? • EU/IMF Agreement….Household Charge a pre-cursor to full property tax. • Provide stable funding base for LA’s
• ……………….An effective funding system, related to a local funding base…………………. and incorporating local decision-making and accountability ……………………………………………….is a crucial element of good local government……