By J. P. Anderson:
TAOISEACH Brian Cowen yesterday braced the nation for an austerity budget set to hammer hard-pressed families with a double blow of tax rises and childcare cuts.
Mr Cowen warned he had no way of avoiding the “tough” decisions dominating tomorrow’s budget as the plunge in the nation’s finances had forced his hand.
As well as a reduction in the childcare supplement and an possible income “levy” of 1%-1.5% on wages of upper middle wage earners, a big increase in DIRT tax was on the cards, while Green energy minister Eamon Ryan refused to be drawn on a mooted Cabinet pay cut. However, it appeared households already reeling from the credit crunch would be spared a new carbon tax.
Finance Minister Brian Lenihan set the tone for the starkest budget for a generation by invoking the language of the Great Depression with Franklin D Roosevelt’s phrase: “We have nothing to fear but fear itself.”
The Taoiseach used Fianna Fáil’s annual Wolfe Tone commemoration at Bodenstown, Co Kildare, to announce he had been forced to make choices he wanted to avoid.
Multi-billion euro spending cuts were set to fall across all Government departments, while means testing for child benefit and medical cards for the over 70’s had not being ruled out.
A €10 per flight short haul air tax and increased medical and health charges were also set to feature.
A temporary “levy” on PAYE and self-employed workers is being considered by Mr Lenihan as a key way to help cover the projected €14.8bn black hole in finances for 2009.
Labour finance spokesperson Joan Burton questioned the honesty of calling it a “levy”, saying “it might be more honest if they were to actually call it a tax rise.”
The €1,000 a year supplement to help pay for care for children under six looks like a prime target, as does child allowance itself.
Controversially, the lottery-funded €85m capital grants pot for sporting facilities may be scrapped entirely with the cash diverted to health.
(Brian Lenihan’s first budget may well be his last).
With central funding announced early, managers will be ready with their scalpels come December, writes Juno McEnroe.
THIS year is unique for local authorities. Contrary to other years, city and county managers will be told what funds they are getting for next year ahead of deciding their own 2009 budgets in December.
So there’s no opportunity to hold out the begging bowl after this week’s budget. Reduced funds for housing, roads, water treatment will create headaches and elected councillors must figure out how to make up shortfalls. Council managers are already turning their attention to local incomes from service charges and commercial rates in anticipation of less funding from central government. But how much can these be increased by? The problem for many local authorities is that this regular flow of income has been dwindling.
Managers have an unenviable task of deciding whether to raise service costs like water charges, parking and planning fees, without scaring away business or development. The Irish Examiner contacted senior management as well as councillors across some of the biggest local authorities. If they are cash-strapped, the harsh effects won’t be noticeable for communities until the second half of next year. Many managers though will start to work with their scalpels once local authority budgets are voted on in December. Officials expect “discretionary” funding to be chopped first, such as cash for amenities like parks, community facilities and sports.
The 3% cut in payroll demanded by the finance minister is expected to be 5% or higher in some areas to compensate for safeguarding savings in essential services like the fire service. It is unclear yet if a bigger redundancy package scheme will come into play.
Expect large projects, particularly roads, not yet contracted or ringfenced for funds, to be stalled. Key water treatment, sewage and drainage schemes — many of which are under way and desired not only by the Green’s environment minister but by Europe, could be further delayed because councils are not getting reimbursed from central government.
Councils are not only looking at current expenditure for 2009, but also their capital spending. These are funds for massive roads and housing projects which usually form part of a three-year-programme.
The problem is the money mainly comes from the Government rather than local incomes. If tomorrow’s budget is as dramatic as is being hinted, three-year capital projects could become four or five year ones. Already, their funding is seriously affected by the huge fall off in development levies (charges paid by developers for each housing unit built).
Fingal had only €24m collected by August compared with a whole €65m for all of last year. Kildare, a huge recipient of the boom, had in just over €11m when it had been hoping for €30m by the end of the year. Only half or less of the years expected development levies were also in Dublin, Galway city and Cork city by then. Some councils are looking at offloading waste services, because of the burden of millions of euro in bin waivers. Doubts also exist over massive state projects like the regeneration of Limerick, developing Cork’s docklands and commitments to Metro North in Fingal.
Anger at lack of funds for waste water plant
THE only city in the border, midlands and western region, Galway, is setting its sights on looking good for next year’s Volvo Ocean Race, which will see some of the biggest racing yachts in the world stop in its waters.
But the cash-strapped council has less aesthetic and more pressing concerns, and that’s before this week’s expected budget cuts are announced.
Councillors feel robbed and want €7.9 million from Environment Minister John
Gormley they say was promised for the running of the Mutton Island waste water treatment plant.
The continued carrying on of its costs will be cut out of other budgets, it is being warned.
There are questions over the high-costing bin waiver system for over 3,000 residents, with hints it may ultimately be passed to a private company. Dún Laoghaire-Rathdown announced its intention on this recently.
The council borrowed heavily for housing last year and with over 3,000 on social housing lists this cash drain looks set to continue.
Doubt is being raised about the capital to help move the docks to a nearby 40 acre site, as well as the business support and money to help pay for the redesign of the CIE Ceannt Station.
As it is, rail and other transport services to and from Galway are set to expand hugely under Transport 21. By 2015, rail demand is projected to increase as a result of the boosted services from 1.25 million journeys through the station annually to 3 million.
Collections of local charges and rates for the council have plummeted so far this year. Less than half of the year’s €30m in commercial rates were in by August. Furthermore, only €11m of the council’s expected near €30m goods and services target have been met.
Moyross housing scheme at risk ONE of the poorer local authorities, Limerick is trying to balance its spending alongside separate government planned regeneration projects in the south and north of the city.
But doubts persist about funding for the besieged Moyross and O’Malley Park housing estates among others.
The city’s expenditure for the year is less than a tenth of Dublin’s, but its service charges and commercial rates are already seriously lower than expected so far this year.
The council has frozen and, in some cases, reduced commercial charges in recent years to boost business. Now what can it do?
Councillors say the city did not benefit from the boom and so it won’t miss what it never had. But private development, which brings in planning fees, levies and Part V social housing, is stalling.
With the site of cranes lying idle over the Parkway Valley shopping centre site in recent weeks, locals fear plans for the biggest retail development in Munster might have collapsed.
There are doubts over the key anchor in the development, Tescos.
There are also questions over a separate development, the Opera Centre on Patrick Street, where less shops mean less levies are being brought in by the council. The city is set to experience severe effects on services and projects, according to an informed source. The crunch will come next year.
Upgrading the city’s water supply looks set to go ahead, but across the board the council is expected to reduce programmes, including in roads, parks as well as staff numbers.
Cuts in the €300m Gateway Innovation Fund could affect development, including plans for pedestrianising parts of the city. The roll-out of the riverside strategy also looks under threat as a result of cuts in Government spending.
Under the National Development Plan, the Limerick-Shannon area was identified as a “gateway town” or hub, along with Cork, Dublin, Galway and Sligo.
* The pedestrianisation scheme for the city centre.
* The regeneration scheme at Moyross and O’Malley Park.
* Doubts over the rail link to Shannon under the National Development Plan.
* Fall-off in funds from the Gateway Innovation Fund.
* Expect cuts in roads, planning, parks and amenities, from less rates and a reduced Local Government Fund.
Amenities and social housing to feel the pinch WITH close to 500,000 people expected to be living in Ireland’s largest county by 2020, there are no shortage of demands. Like Galway city, Cork bemoans the fact its waste water works and water services are not being reimbursed sufficiently by central government.
According to this year’s budget, “adequate funding remains a significant concern for this authority”. Alone, nearly a third of its €360 million current spending this year is for roads.
One of the biggest water treatment initiatives in the State is under way in the county. But at a phenomenal cost. Its thought anger from Europe over Ireland’s poor water record means the plans must go ahead. But will they?
Business has taken a hit. Towns like Carrigaline, for example, have empty shop fronts which means less rates for the council, say officials.
The amenities budget is expected to collapse as it is nearly entirely funded by development levies which amounted to only €28m at the end of August.
Income from the county’s services, such as water, bin and other charges, was only half the expected target with three-quarters of the year gone.
Councillors say it is almost certain road and water projects will be stalled. Doubts surround the construction of the N28 route linking Ringaskiddy to Cork city, a crucial road linking business from the harbour.
A slowdown in social housing output is inevitable, but it is hoped levies banked from previous years may keep capital works rolling on.
One builder is allegedly demanding levies for hundreds of unfinished homes be returned by the council. This has serious repercussions when funds have already been earmarked for other projects.
Councillors in the county are openly expecting the 3% payroll cut demanded by central government to be extended to 5% or even higher in certain non-essential sections of the authority.
Doubts over €60m docklands commitment HOME to more than 123,000 people, the biggest project on the horizon for Ireland’s second largest city is the regeneration of the docklands.
Plans for the new urban waterfront quarter are a priority for the council and include a €2 billion investment by private developers. This won’t come without the cash injection from the Government to lay down the basic infrastructure.
The council are still awaiting a decision on €60 million in funds needed for the Eastern Gateway Bridge across the River Lee for the regeneration project. Doubts still remain over a commitment to put cash behind the plans that would eventually bring at least 25,000 jobs into the area and see 20,000 new residents living there.
Councillors are also annoyed no tax incentives have been decided for the area yet.
With local services, there is concern over a €3m bill the council is paying for bin waivers and the other income revenue private waste collectors have already taken away. Councillors are wary though about handing all the service over to the private sector, especially ahead of local elections, in case charges are hiked up.
But collecting service fees will be difficult with less business activity in the city, concede council chiefs. Expect a fall-off in housing maintenance and works on roads and parks.
Temporary contracts will not be renewed with staff and projects, say sources.
But despite the lower income, it is unlikely there will be hikes in commercial rates and a full handover of bin services to the private sector.
But, there will be a slowdown in social and affordable housing, say officials.
Privately, senior council officials only expect income from development levies to drop by a few million euro next year, impacting little on capital projects. However, this may be optimistic with figures to August this year showing less than half the year’s expected amount in council coffers.
* No decision made on tax incentives for docklands regeneration.
* Funding of €60m bridge to help start project is undecided.
* Bin waiver scheme is draining funds.
* Expected fall in service charges will hit spending.
* Slowdown in social and affordable housing.
Water and transport services under threat THE State’s second largest county after Cork, a major challenge is in meeting its water and transport requirements.
Over three quarters of its people live in villages or rural areas with less than 500 people, with many in highly indented coastline stretches that altogether stretch for almost 2,000km.
Half of lands are classified as agriculture and there are plans to spend €2.5 billion on water services and roads in the coming years to meet needs.
But councillors are already concerned about the lack of funds for essential repair grants for the elderly, sick and disabled. Many grants are for showers and chairlifts for stairs and other facilities for the vulnerable. Elections are also around the corner.
Applicants are being written to warn them there is not enough money to meet needs. There is also talk of housing spending in general dropping significantly next year.
Councillors agreed last month to extend the authority’s overdraft from €20m to €35m to meet pay demands. The added interest will add to the bills.
Galway County is already heavily reliant on Government funds, with a quarter of its current spending coming from the Local Government Fund.
Its development levies are little but its other local incomes like service charges and rates already look like they have been halved for most of 2008.
But the begging bowl was already out when the manager said in his budget expectation for this year that significant “proposals in relation to improving infrastructure, promotion of economic development and promotion of community involvement and housing...cannot be accommodated within the resources available”.
* Doubts over commitment to the €30m Tuam bypass * Concerns over plans for the relief roads in Moycullen and Barna * Cuts in community programmes, clubs and amenity grants.
* County overdraft gone from €20m to €35m * Roads for disadvantaged areas could be delayed.
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