Denise Mitchell
Ceist:780. Deputy Denise Mitchell asked the Minister for Housing, Local Government and Heritage the estimated full-year cost of increasing the local government fund by 10%, 15% and 20%, respectively. [57324/23]
Amharc ar fhreagraWednesday, 17 January 2024
Ceisteanna (780)
Freagraí scríofa
The Local Government Fund (LGF) in any given year, comprises of a combination of Local Property Tax (LPT) receipts and Exchequer funding for various supports and programmes. For 2024, the expected expenditure from the Fund will be over €1bn, and the Government is making a significant contribution of €449.9m of Exchequer funding in this regard. The Exchequer funding is made up of €110m towards Local Property Tax (LPT) equalisation, €315.2m towards pay & pension support (subject to further increases arising from public sector pay agreements) and €24.7m to support smaller miscellaneous schemes across the sector. The estimated full-year cost of increasing the Exchequer contribution to the LGF by 10%, 15% and 20%, would be €45m, €67.5m and €90m respectively.
As regards increasing the LGF by a specific percentage; the contribution from the Exchequer is largely demand-led and the following should be noted;
• Under the LPT Allocation model, every local authority is entitled to receive a minimum level of funding known as baseline funding. If an authority’s LPT yield is below this level, it will receive equalisation funding to supplement yield and bring it up to the baseline level. 21 authorities will receive equalisation funding in 2024. Following the conclusion of the baseline review in 2023, there will be an overall increase in the baseline from €353m to €428.4m from 2024 onwards, and thereby considerably increasing the equalisation funding required by the Exchequer. Included in the recommendations of the baseline review is that the LPT baseline funding of local authorities be further reviewed at 5 year intervals
• A large portion of the 2024 Exchequer contribution will be towards assisting local authorities with the cumulative effect on pay costs arising from National Pay Agreements since 2016. This increases year-on-year; i.e. it has increased by 10% from 2023 to 2024, and is expected to increase further following any new pay agreements. The increase is calculated by assessing the cumulative impact of the pay agreements for the year, using the most recently available payroll data for the sector.
• The Fund provides once-off support for exceptional events that impact the sector. For example in 2020, 2021 and Q1 2022, the LGF supported local authorities and local businesses with the Covid rates waiver/credit in lieu scheme, and lost income and extra costs due to the pandemic, at a cost of €1.4bn to the Exchequer. In 2023, the Fund also assisted the sector with rising costs, in particular rising energy costs, providing €60m for this purpose.
• Finally, the Fund supports a number of smaller projects (i.e. Miscellaneous Schemes) across the local government sector, with €24.7m being provided for this purpose in 2024, a 17% increase year-on-year. The allocation is demand-led, and supports initiatives such as Creative Ireland, Just Transition and Local Government Management Agency Innovation and Reform Projects.
In conclusion, the annual contribution by the Exchequer to the Local Government Fund is determined in the main, by the level of LPT equalisation and pay agreement support required, as well as other matters arising. The provision of additional funding is considered within the context of available resources and prevailing financial circumstances at the time.