Cash-strapped Council owed over Û16m in unpaid rates

By Dara Bradley

A massive rates bill – totalling well over €16 million – owing to Galway City Council for last year has yet to be recouped.

The cash-strapped local authority revealed the financially grim news to elected members at last evening’s City Council meeting, when it was warned that further cutbacks in services are on the cards unless commercial rates are paid by struggling city businesses.

Head of Finance, Edel McCormack, said that the balance of commercial rates owing to the City Council that were due by December 2011, was €16.435 million – the shortfall in funding means the Council is becoming “dependent” on an overdraft facility to maintain services.

Ms McCormack revealed that if more people within the city boundary do not pay the controversial household charge, then planned spending on essential services will have to be slashed again.

Ms McCormack also disclosed that the City Council is effectively dependent on, and is only operating on a day-to-day basis because of, an overdraft. It received sanction for an overdraft facility of €14 million in 2012.

“We are becoming increasingly dependent on overdraft use due to the increasing levels of outstanding debt and the number of customers on extended payment plans,” she said. Cash flow in “reviewed daily” to minimise the Council’s need to use the overdraft, she said.

She said the Council is expecting €6 million from the Local Government Fund, which is paid for by the Household Charge money collected in this area, but “this amount may be reduced if receipts from the charge do not increase further”. And if more people in the city don’t pay the charge, “this may necessitate a revision in expenditure budgets,” she warned.

The vast majority of the unpaid rates – €14.502 million – relates to arrears of rates since January 2011, which were due to be paid the previous year.

This is despite the fact that the Council effectively ‘wrote off’ rates totalling €4.7 million in 2011 because of vacant premises, companies that were liquidated and for special cases such as charity, arts and educational groups whose businesses are exempt from rates.

For more, read this week's Connacht Sentinel.