It is a matter for each local authority, including Sligo County Council, to determine its own spending priorities in the context of the annual budgetary process having regard to both locally identified needs and available resources. The elected members of a local authority have direct responsibility in law for all reserved functions of the authority, which include adopting the annual budget and authorising borrowing, and are democratically accountable for all expenditure by the local authority. The continued deterioration of Sligo County Council’s financial position is of serious concern to me. While it is a matter for individual local authorities to manage their own day-to-day finances in a prudent and sustainable manner, my Department is in regular consultation with the Council in relation to its financial position, including in relation to the agreement of a long term financial plan to address these issues; this process is on-going.
Under the Local Government Act 2001 local authorities must obtain the consent of the appropriate Minister to borrowing, including for overdraft borrowing which requires the consent of the Minister for the Environment, Community and Local Government. Given the nature of how local authority expenditure is funded and recouped, it is accepted that local authorities may have recourse to overdraft from time to time as:
- capital spending by local authorities is funded in arrears by this Department and other relevant Government Departments;
- the timing of local authority income – rates, charges, rents, etc. – will not always match expenditure; and
- local authorities cannot (in most cases) cease service provision in the event of non-payment of charges.
In considering sanctioning applications for overdraft, my Department ensures that the level of overdraft sought is not excessive, the purpose for which the overdraft is sought is appropriate and that the overdraft has the approval of the elected members of the local authority (as required under section 106 of the Local Government Act 2001).
Sligo County Council had a sanctioned overdraft approval of €13.5m to 31 March 2015. The Council submitted an application to my Department, accompanied by the required resolution from the Members of the Council, seeking approval of an overdraft limit of €13.5m to commence with effect from 1 April 2015. This request has been sanctioned for a period of 6 months by my Department.
