Cork County Council facing 'stark' financial challenges that could last for years

Cork County Council facing 'stark' financial challenges that could last for years
County HallPic Denis Scannell

AN estimated €23m - €30m budget 2020 deficit for County County Council has been described as ‘stark’ by County Hall Chief Executive Tim Lucey who said the deficit could cause challenges for the next number of years.

County Hall’s head of finance Lorraine Lynch said the income was the biggest problem with the 2020 budget of €338m made up of roughly a third income from goods and services, a third from grants and subsidies and a third from rates.

The budget 2020 already included €2.3m from the county’s existing surplus reserves.

Detailing the figures, Ms Lynch said that grants and subsidies and Local Property Tax makes up €119m of income for the county and it is still coming through, but rates had been very seriously affected.

“We did an early analysis in March, and in May. We went through each business category, looking at all those and all the phases and we have estimated that 54% of our rates income is going to be impacted.

“For every three months that amounts to nearly €15m or for the year €59.2m. Over half our rates will be affected and that is not a position we want to be in.

Ms Lynch said the current rates waiver is for three months, from March to May and she said businesses will be impacted beyond that.

“We know businesses are going to be impacted beyond three months. That is going to impact our ability to collect those rates, in terms of their capacity to pay.” Goods and services account for €106m of the county’s income and the head of finance said they estimated parking fines and charges made a loss of €1m, with another loss of €1m in leisure and tourism facilities.

In total there is an estimated loss of €6m - €8m and Ms Lynch said it was difficult to find savings.

A total reduction of €9m was found but the council took the decision to spend €6m on reactivation fund in order to rejuvenate the local economy and provide a kickstart to businesses across the county.

“We will forgo some of that saving to help the economy. It is a massive commitment if you look at the bottom line.” The budget, with the use of the surplus reserve of €5m and taking into account additional costs the likes of PPE and things like holding meetings with social distancing, the overall deficit is €23 to €30m with a cumulative deficit of €23 - €30m.

In terms of impact, Ms Lynch said the local authority is going to have to start clawing back that deficit in terms of providing services.

“It is finding the balance between utilising the reserves that we have to continue to provide services but we still have to proofed financial situation in order to have a positive impact in terms of our budgeting.” 

Ms Lynch said that they don’t know what their income will be for 2020. “We don’t have a full idea of what the income will be like and we can’t reduce our expenditure in line with our income.

“Without national funding, we will have a significant deficit for 2020 and that will impact on our budget for 2021 and possibly a good few years as well.”

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