A new local government funding model, recommended by a report from experts at NUI Galway, could be the key to ending underfunding of the Galway County Council, a situation which has left it “starved of cash”.
This is the view of Independent Galway West TD, Noel Grealish, who is calling on the Government to adopt the new funding model in the report, by Dr Gerard Turley and Dr Stephen McNena of the JE Cairnes School of Business and Economics at NUIG.
If adopted, the proposed new system could see the council’s annual top-up, or equalisation, grant from Government increase to more than €23 million annually, from a level of less than €3 million currently.
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The current system has operated since 2014, when sweeping changes to the local authority structure brought changes in the way they are financed - 20 per cent of the then newly introduced Local Property Tax was set aside to compensate poorer councils.
“The divvy-up of that money has always been poor for Galway County Council, which has struggled with a much lower budget to spend and fewer staff than comparable councils,” said Dep Grealish [pictured above]. “It’s past time a new and fairer way of funding was introduced. That is what the report by the NUIG economics experts has recommended.”
Disparity
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In 2019, the Galway County Council’s overall budget was €120m, serving a population of 179,000 — behind Tipperary (€162m with a 160,000 population ), Donegal (€146m for a population of 159,000 ), and Mayo (€138m, serving a population of 130,000 ).
The council’s income from rates that year was €28 million, again well behind Donegal (€34 million ), Mayo (€32 million ) and Tipperary (€32 million ). In terms of staffing, the council’s total of 757 was considerably less that of Mayo and Tipperary, with more than 1,000 staff each.
“Yet when it comes to equalisation grants, which are supposed to compensate councils with a gap in financing, Galway gets only a fraction of what these counties get,” said Dep Grealish. “It was less than €2.9 million in 2017, while Donegal and Tipperary got €16 million each, and Mayo got more than €11 million.”
'A fairer method'
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The revised model, as proposed by the NUIG report, would base the equalisation payments on the ability of a council to raise its own revenues - as is the case in many other countries
This model would see the distributable pool increasing to about €210 million. “Although larger than the existing fund, it is still smaller than equalisation funds in many other OECD countries,” it adds.
The Galway County Council would be one of the biggest winners under the proposed changes, with its share of the pooled money increasing, based on 2017 figures, from less than €2.9 million to almost €23.2 million.
“The proposed model would be a fairer and more equitable method of financing local authorities,” said Dep Grealish, who is calling on the Government to adopt the model recommended by the NUIG experts.
