The Government is providing €156 million to support local authorities through the exchequer contribution to the Local Government Fund (LGF) in 2020 meaning that, on a like-for-like basis, local authorities are expected to be in receipt of €23 million more in funding in 2020 when compared to 2019. The extra €23 million represents an increase of 27% in exchequer support for local authorities to meet additional pay and pension costs arising from national pay agreements.
While there is a headline reduction on the 2019 budget allocation of €185m to the Fund, this is due to a reduction in the exchequer supports required by local authorities in 2020. The realignment of support for Local Government in 2020 is largely as a result of the valuation of Irish Water as a global utility liable for commercial rates from 2020. As a consequence of this, there is no longer a requirement for general water rates compensation in 2020 of circa €47m.
I expect that the local authority sector will collect a broadly similar amount through commercial rates as was received in previous years through exchequer funded water rates compensation. I expect that in some cases, individual local authorities will receive more in commercial rates than they received in compensation, and I accept that some local authorities will receive less. My Department is actively monitoring the financial impact of this transition on individual local authorities, in the context of their overall financial position.
It is expected that Local Property Tax (LPT) allocations of €516.8m will be made from the Fund in 2020 (an increase from €503m in 2019). The increase in LPT allocations is accounted for, in the most part, by the decisions of 19 local authorities to increase their LPT rates above the basic rate for 2020.