THERE could be “a big cut in expenditure for next year” for Cork City Council, as it has emerged that City Hall estimates a loss of €9.4m in revenue for this year.
That figure is not inclusive of rates. The Government announced last week that the exchequer will provide €260m to fully fund the cost of waiving rates for a three-month period for businesses.
However, it is not yet known if that initiative will be extended past three months, or if it will be applied retrospectively to businesses which closed before March 27. If not, it is feared income loss at City Hall could be much higher.
It is understood that the main source of the loss of income at present for Cork City Council is a loss in car parking revenue, while household rents, licences, and planning application fees are also smaller contributory factors.
A spokesperson for City Hall confirmed to The Echo: “We are estimating that the loss in income, excluding rates income, will be approximately €9.4m for the year.”
As for the issue of a potential loss of rates income: “The department is currently considering the implementation arrangements in relation to the rates waiver initiative and will be in further contact with Local Authorities once these arrangements have been finalised.
“We will only know how much we have lost in rates income as the year progresses.”
Sinn Féin councillor Mick Nugent said it will be a very challenging period for Cork City Council.
“There’s going to be a big financial challenge for the council for the rest of the year,” he said.
“There’s a big loss of income. It’s going to be a big challenge to put a budget together for next year with that kind of hole in the income.”
He intends to raise the issue at Monday evening’s city council meeting.
Concern is now turning to potential cuts to services, with Fianna Fáil councillor Terry Shannon confirming a meeting of the finance and estimates committee will be held to review the financial situation.
“We’ll have to look at where those adjustments will have to be made,” he said. “It’s going to be painful.
“Clearly we want to try to protect some of the initiatives that we have, but with that type of a loss, it’s going to be difficult.
“A lot of people felt that once the Government reimbursed the rates we would be grand. We’re not. We have the local income loss as well and that is significant.”
Mr Shannon welcomed the Government’s decision to waive rates and reimburse council for the three-month period.
However, ‘it’s not as if everything is rosy in the garden from that point of view’ and he said more clarity is needed on commencement dates and possible extensions to the scheme.
Fine Gael councillor Shane O’Callaghan also said that it was only “right and fair” that businesses that are forced to remain closed at the end of the three-month period should not have to pay rates for the extra period in which they are closed.
Meanwhile, Mr Shannon has called for additional funding support for the many programmes and grants run through the local authority.
Without clarity on these issues, Mr Shannon said the financial situation may get worse.
He said that “€9.4m is the “estimate at present. It may go up, but it certainly won’t go down. From our point of view we need to see how we mitigate those issues. That’s going to be a big issue for us.
“We’re not in a position to recover that €9.4m and it will mean a lot of cuts to programmes that will be needed in terms of coming back to opening up society,” said Mr Shannon.