Council faces dilemma on Local Property Tax

Sam Matthews


Sam Matthews

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Local councillors are facing a dilemma on Monday when they will decide whether or not to slash services or implement an increase in the Local Property Tax (LPT).

Local councillors are facing a dilemma on Monday when they will decide whether or not to slash services or implement an increase in the Local Property Tax (LPT).

While other local authorities, including several Dublin councils this week, have opted to reduce the LPT by 15%, it seems extremely unlikely that Kilkenny will follow suit. The stark reality is that the council’s finances are under pressure, and the council executive has said that a 5% increase in the tax should be considered to ensure a balanced budget for 2015 and maintain funding levels for the Municipal Districts.

Elected members have the power decide if the rate of LPT is to be decreased or increased by up to 15%, or maintained at the basic rate. However, it has been made clear that any decrease would have to be accounted for with a reduction in expenditure on day-to-day services, as no additional funding will be provided by the Equalisation Fund.

If the councillors opt to make no change to the LPT basic rate, the projected income from the tax would be €7.69 million, of which 80% is retained locally. The effect of varying the rate by 15% either way would be a loss/gain of €1.15 million.

But there is little room to manoeuvre for the councillors, who have already been asked by the council executive to consider a 5% increase in the LPT rate just to make ends meet. Finance director Martin Prendiville has warned that the local authority must have funding to provide for Kilkenny’s municipal districts, as well as to cater for expensive delays to the CAS bridge project.

An increase of even 1%, worth over €76,000 in extra revenue to the council, would be a bitter pill to swallow for councillors. Several campaigned in the recent local elections on the basis that they would attempt to reduce the deeply unpopular tax.

The total number of properties declared in Kilkenny at present is 35,000, with a 95% compliance rate with the household payment. Some 90% of these properties are valued at €200,000 or lower.

The most common LPT valuation band in Kilkenny is the €100,000 - €150,000 category, which, at the current rate, has an LPT of €225 per annum. A 15% change in this is €33.75, up or down.

At a meeting this week of the county council, acting chief executive John Mulholland pointed out that Kilkenny was the envy of other places following its recent Tidy Towns success, but that services such as street cleaning and road maintenance could be among those affected by the councillors’ decision.

He also said that the bill for the delays to CAS so far was now €560,000, but this could be a different figure again by Monday. He acknowledged the difficulty of the situation with which the members must now grapple.

“It is difficult to see the council come out of this well in either scenario,” said Mr Mulholland.

The councillors have now just a few more days to consider the estimated income and expenditure for the next year, the financial position of the council, and the potential effect of a new rate. They have asked finance director Martin Prendiville to provide a detailed breakdown of figures, as they attempt to work out which local services, if any, can afford to be cut.

The council must also take into account feedback from the public during consultation, which was overwhelmingly of the same sentiment. A 30-day public consultation process began in July, which was later extended as only one submission was received in the initial time period. During the extended consultation period, which ran until August 22, a total of 175 submissions were received.

Some 66 of these were from individuals outside the county, and so only 109 were considered valid. Of these, 106 called for a full 15% reduction in the tax, and 96 of them contained the exact same wording. Other submissions came from the Kilkenny IFA, the Ballyragget Development Association, and the Sinn Fein group – all seeking a reduction in the rate.

A decision must be made at Monday’s meeting, which takes place at 4pm in County Hall.