Analysis: ahead of the local elections, it is important to inform ourselves of the key spending and tax decisions at local authority level
By Ger Turley, University of Galway
At the end of every calendar year, our local authorities budget for the following fiscal year. 2024 is no different but, as it is an election year, more attention will be given to these local budgets. After wading through 31 budgets, hundreds of tables and thousands of euro amounts, here are the most important takeaways for Budget 2024. A summary of the spending and income data for all 31 local authorities is provided in the table below.
Budget size
Total budget spend for 2024 is €7.4bn, or just over €1,400 per person, nationally. This is the largest revenue budget ever, and exceeds the 2023 figure by 10%, an amount in excess of the forecast inflation rate. In terms of the functions of local government, of the eight expenditure divisions, spending on Housing & Building, and Road Transportation & Safey account for 57% of the total estimated budget. This covers maintenance of local authority housing, housing supports (via the HAP and RAS programmes), homeless services, upkeep of local and regional roads, public lighting, traffic management, road safety and others.
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From RTÉ News in July 2023, almost 60% of local authority home loan applications have been rejected
Spending per person
Given that the economic rationale for local government is to represent differences in local conditions and voters' preferences, expected expenditure per person varies widely across the 31 local authorities. The highest spend per person is in the four Dublin local authorities (€1,590) and in some small rural councils such as Leitrim County Council (€1,494) and Longford County Council (€1,492).
As was the case five years ago at the last local elections, Kildare County Council (€955), Meath County Council (€945), and Galway County Council (€895) have the lowest spend per person. Although narrowed by equalisation grants from central government, these differences reflect both local circumstances and political choices.
Increase in spending
Since the last local elections in 2019, the increase in local government budgeted expenditure nationwide is over 40%. Whereas some councils saw an increase less than inflation - the smallest increases all recorded in the west of the country, by Roscommon County Council (32%), Donegal County Council (27%), and Sligo County Council (17%) - others recorded increases greater than inflation, with the largest increases recorded by Louth County Council (62%) and Meath County Council (68%).
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Central government grants
The increase in expenditure by the local authorities was largely financed by big increases in grants & subsidies from central government. During the five years from 2019 to 2024, central government grants to the local authorities increased by a whopping 85%. Mainly specific-purpose grants, these paid for a plethora of local authority services, and once again, primarily in housing and roads.
Expressing central government grants per local authority resident, the variation is wide, from highs of €920, €879, and €871 to Leitrim County Council, Longford County Council, and Monaghan County Council respectively, to lows of €421, €409, and €363 for Cork City Council, Kildare County Council and Meath County Council, respectively.
Commercial rates
After central government grants, the second most important source of funding for local government is commercial rates, namely a tax on commercial and industrial property. Partly reflecting the differences in commercial and economic activity across local authorities, this tax is known as the Annual Rate on Valuation (ARV).
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From RTÉ Radio 1's Today with Claire Byrne, are we undervaluing our Local Property Tax?
In 2024 it ranges from a high of over 0.27 by South Dublin County Council, Dublin City Council, Limerick City & County Council and Waterford City & County Council to a low of less than 0.20 by Westmeath County Council, Meath County Council and Fingal County Council. Technically, rates are used to balance the adopted budget as is required of Irish local authorities and many municipalities worldwide, as a budgetary rule to prevent profligate spending and ensure fiscal discipline.
Local Property Tax
What may come as a surprise to taxpaying households is that a much less sizeable source of income for local authorities is the annual tax on residential properties, in the form of the Local Property Tax (LPT). In total, this accounts for only 7% of total local authority revenue.
Once again, there is a wide variation in the LPT share of total income across local authorities, with rural local councils relatively more reliant on the LPT/equalisation payment than the larger urban councils. For example, whereas Leitrim, Roscommon, Sligo, Donegal, and Monaghan County Councils have LPT/total income shares of 15% or higher, in Galway City Council and the four Dublin local authorities the LPT/total income share is 5% or lower.
* Limerick City & County Council is not listed here as it operates HAP on behalf of all 31 Councils
^ The four Dublin local authorities are combined due to the shared services between the four Councils
** Cork City Council and Cork County Council are not listed here due to the 2019 boundary change, and the incompletion of the rates revaluation
^^ Includes equalisation grant and any local adjustment
Note: DLR = Dún Laoghaire-Rathdown
As the local elections approach and candidates begin to knock on doors and canvas on social media, it is time to inform ourselves of the key spending and tax decisions at local authority level. The outcome of these decisions is reflected in the local authority budgets. As the US president Joe Biden likes to say, when quoting his dad, "don’t tell me what you value, show me your budget, and I’ll tell you what you value".
Budgets are valuable statements and deserve our attention between now and the local elections this summer. Closer to election day, our local authority finances website will be updated to reflect the 2024 budgetary data, disaggregated by council, services, and income sources. There, voters can see how local councils spend tax revenues. After all, isn’t the purpose of elections to decide how taxes should be spent?
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Dr Ger Turley is a lecturer at the J.E. Cairnes School of Business and Economics at the University of Galway. He is the co-manager of the Local Authority Finances website.
The views expressed here are those of the author and do not represent or reflect the views of RTÉ
