DONEGAL’S councillors have been warned that next year is shaping up to be one of the most challenging in recent history.
Rising costs and dwindling income streams have left the local authority struggling to match the budget delivered in 2021.
“The expectation must be that we can only do next year what we have done in the current year,” Council’s Head of Finance Richard Gibson told members of Letterkenny and Milford Municipal District.
The annual Draft Budgetary Plan meeting heard that a change to the Local Property Tax system as well as a drop off in commercial rates as a result of the pandemic have hit the local authority’s income hard.
Richard Gibson said that balancing a budget was always challenging. But 2022 was developing into “one of the most challenging in many years”.
“We have increasing expenditure across the board and rising costs in terms of pay, energy costs and electricity costs,” Mr Gibson said.
“The cost of petrol and diesel is more expensive than it has been in ten years, the cost of equipment and the cost of investment in IT infrastructure and software to make our organisation resilient and make sure we can provide modern services.
“The cost of construction materials, everyone will be aware that there are increases there.
“All costs across the board appear to be going up for us.”
Councillors were told that while things were getting “tighter and more challenging”, the authority’s two main income streams of Local Property Tax and commercial rates are drying up.
From the start of 2022 the way in which property tax is measured is set to change. And while each county will be impacted differently, projections indicate that for some, including Donegal, the intake will be less under the new system.
Income from commercial rates has also been pummelled due to the pandemic. Richard Gibson said an additional factor has been the shift away from bricks and mortar stores to online.
“All these things mean commercial rates will be a fragile income source for local authorities in the years ahead.”
Local Property Tax and commercial rates account for over 40 per-cent of Donegal County Council’s annual income. With those two shrinking and costs across multiple sectors rising, the best that can be hoped for is that the local authority’s budget for next year will tread water in line with 2021.
financial challenges
“These account for about 40 per-cent of our income and when you have that remaining relatively static and your expenditure increasing at an accelerated rate due to a number of factors, it is obvious that it is going to cause financial challenges for the council in the years ahead. And we are not just thinking about next year, we are thinking three to five years ahead at this point.
“We can’t hope to add significantly to the level of services to be provided next year and our target is to achieve an equivalent level of service as has been provided in budget 2021,” Mr Gibson added.