Demands for better services are legit, but council can’t do it with current funding, says council CEO

In their programme for government, Fianna Fáil, Fine Gael and the Green Party pledged that “All money collected locally will be retained within the county”.

And indeed, they ended a system whereby local property taxes from local authorities that raised more, like Dublin City Council, were being sent to local authorities that raised less, like Donegal County Council.

This equalisation mechanism not only took money from taxpayers in Dublin city that could have been used to improve services in the city, and sent them elsewhere – it also gave councillors a reason to vote each year to keep the local property tax as low as possible.

After all, why raise taxes on their own constituents only to see that extra revenue sent across the country to benefit someone else’s constituents?

When the equalisation system was on the way out though, both Dublin city councillors and Dublin City Council managers said they suspected the central government would find another way to do, essentially the same thing.

Now the council is working on its 2025 budget, and has found that although the central government’s going to let it keep all its local property tax (LPT) this time – it’s going to reduce other funding to the council.

The government expects Dublin City Council to raise about €101 million in local property tax in 2025.

But the Department of Housing, Local Government and Heritage has decided that Dublin City Council “has sufficient funding”, and so has directed that €57.6 million in LPT receipts from Dublin city households, “be used in lieu of Government grant funding”, the council’s draft 2025 budget says.

So that blunts any boost to Dublin City Council’s finances from keeping LPT from the city in the city.

Of course, LPT is only a small part of the council’s  €1.48 billion in income.

The three main funding streams are government grants and subsidies (€636.9 million), commercial rates (€412.2 million), and “goods and services” like social-housing rents and parking charges (€376.6 million).

But after some cost increases here, some funding increases there, the result is that “The draft Budget provides for existing City Council service levels to be maintained in 2025,” writes Shakespeare in his introduction to the draft budget.

“It is disappointing that the City Council will not be able to respond to the many legitimate demands for further improvements in the services it provides to meet the needs of our City, and all those who live, work or visit the city,” he writes.

In the end, the government decides how much the council gets to spend, and it’s about the same every year, no matter what, councillors have said.

So the government should either do away with the charade of having councillors decide each year whether to vary the local property tax up or down by 15 percent each year, former Labour Councillor Alison Gilliland said.

Or it should let councillors set the rate and keep any extra tax revenue they raise to spend on services in their area, Sinn Féin Councillor Séamas McGrattan has said.

“If we increase the local property tax, or rates, we should then have the power to spend it,” says McGrattan, head of the council’s finance committee. “That’s the heart of local democracy around the world.”

The council has a meeting scheduled for Monday to discuss its 2025 draft budget.