If Galway improves its status to a Tier 4 city, its funding from central government could increase by up to €8.52m per year. Over the lifetime of a 5-year council, this adds up to a hefty €42.6 million – roughly 20 per cent more than Galway City Council currently receives from central government.
This was the gist of the message to city councillors from officials at an acrimonious budget meeting on Monday.
Currently Galway city is considered a Tier 5 local authority based on permanent population, road network length and other metrics. The Department of Local Government calculates the baseline funding necessary for an authority based on these indicators.
With a short road network and low population, Galway city’s baseline need is considered the lowest in the country. This means Galway city does not keep 100 per cent of its own taxes, as city property owners pay more than the government calculates we need to fund local services based on these baseline calculations.
All in, it currently costs Galway City Council around €121m to run the city each year, not including interest on loans necessary to cover expenditure. Galway City is the only authority on the west coast not to retain its local tax yield.
Robust, and sometimes tetchy, discussions between senior local authority officials and city councillors at the annual city budget meeting this week hinged on several council members voicing unwillingness to increase commercial rates – the council’s tax levied on businesses in Galway city.
In October, a majority of city councillors grudgingly voted to increase Local Property Tax (LPT ) by 15 per cent, Galway’s first increase since LPT was introduced a decade ago. This hike, estimated to cost 90 per cent of local households an extra €40 per year, should generate almost €1.5m extra per year for the city.
Based on parking charges, rents, planning fees, Local Government Fund, other state grants and commercial rates, Galway City Council is expected to take in €147m next year. One third will be from commercial rates. Proposals to increase tax on businesses should generate an extra €6.4m per year, or €32m over the life of a 5-year council.
This increase will be levied if councillors vote to increase the Annual Rate on Valuation (ARV ) on businesses from 0.217 per cent to 0.25 per cent next week. City accountants estimate this should cost 70 per cent of Galway city businesses an extra €20 per week.
However, almost one quarter of city businesses could pay massive multiples of this figure based on complex calculations involving company turnover, floor space in commercial use, and property values. Councillors raised concerns that hospitality and light industry may bare the brunt of these raises.
City executives presented a number of small business support schemes, such as a 5 per cent annual tax rebate, almost €8m in Increased Cost of Business (ICOB ) grants, and a €4,000 per business Power Up grant before Christmas as amelioration measures.
“The funding model from government does not take in to account the tourist visitor numbers to Galway, daily commuters into town, flood risk and other strategic factors,” said Helen Kilroy, the city council’s director of finance, after the budget meeting. Her figures presented to councillors showed the largest two line-item cost increases in next year’s city budget will be an extra €9 million for homeless services, and €2m for payroll costs.
Declan McDonnell (Ind ), a city councillor for 33 years, told the meeting that he had never before experienced a budget presentation from a city manager and finance director “where they don’t point out a bit of leeway for councillors’ discretion. This budget has no leeway.”
Councillors heard a bleak warning from officials that if councillors decline a rates hike next week, non-essential city projects must be cut by €6m to balance the books. These include masterplans for Renmore, Millers Lane and Kingston, street cleaning, tourism development, sports grants, a new derelict sites team, climate action, housing maintenance, footpaths, community facilities and EV chargers.
Councillor Niáll McNelis (Lab ) complained the way officials notified potential cuts, by putting big red ‘X’s through photos on a screen “was like an episode of X Factor” and that councillors “were already getting it in the neck” about recent LPT increases. “Our CEO needs to talk to our five new TDs to talk to government. Not one supported increasing LPT.”
Galway City chief executive, Leonard Cleary, presiding over his first city budget meeting with Mayor Peter Keane (FF ), said without a €6.4, tax raise, “the city is essentially running on fumes,” and will struggle to match Limerick or Waterford's progress.
“We’re Tier 5, same as Leitrim. We need [content] for our business case with government to tackle a lack of funding. We [Galway city] need to show we have played our part in generating revenue, and that residents and businesses here have made a contribution,” Cleary told councillors.
In response to councillors’ questions about legal consequences if they refuse to pass a budget, the response was stark, with officials suggesting broken playgrounds cordoned off, graffiti not cleaned, and St Patrick’s Day cancelled.
“If we don’t adopt a budget within the legislation's timeframe, then a team from the Department comes in and takes over,” finance director Helen Kilroy told councillors. “You are all sacked; I’m not.”
The meeting was adjourned without decision until next week.
