AILG Training Seminar for Elected Members Local Authority Finance & Budgets Tom Moylan.

AILG Training Seminar for Elected Members

Local Authority Finance & Budgets

Tom Moylan

Local Authority Finance & Budgets - Key messages for Elected Members

1.Changes to Commercial Rates for 20152.The Budget Documents – A guide for the Elected Member3.Determination of Annual Rate on Valuation (ARV)4.Annual Financial Statement (AFS)5.Schedule of Municipal District Works

Note: It should be noted that the umbrella term “municipal district” includes

all other variations of this type of formation as set out in Part 3A section 22A of the Local Government Act 2001 (as inserted by the Local Government Reform Act 2014) e.g. metropolitan or borough districts.

In the case where a local authority does not have municipal districts, the requirements relating to municipal districts will therefore not apply, e.g. Galway City Council.

Commercial rates – key messages for elected members

Significant contribution to the funding of local government – Rates account for between 9% and 61% of total funding for local services at individual local authority level, averaging over 35% nationally

Elected members are legally required to adopt an Annual Rate on Valuation (ARV) at the annual budget meeting. This ARV is applied to the valuation of each property as determined by the Valuation Office to determine the amount of rates that each individual rate payer is required to pay.

Local Government Reform Act 2014 dissolved a number of rating authorities and provided that each county, city or city and county council will now constitute a single rating authority for the whole of that area. As a result, the differing ARVs that have prevailed across former rating authority areas (i.e. former town councils etc.) must be harmonised.

The 2014 Act provided a mechanism for the harmonisation of ARVs within counties over a ten year period with the use of a Base Year Adjustment (BYA). The Act now requires that each local authority (that now encompasses former rating authorities where differing ARVs applied) must, in addition to the ARV, adopt a Base Year Adjustment for each former rating authority area.


Ten year adjustment period beings in 2015

In 2015, the BYA is calculated as the difference between the 2014 ARV and the new 2015 ARV – neutralises any increase/ decrease in rates due in 2015 that would otherwise occur as a result of the ARV struck by the members for the amalgamated authority as a whole, i.e. rate payers will pay no more or no less in 2015 than they did in 2014: arithmetic exercise in 2015

From 2016 on, members continue to adopt an ARV; however, the ARV

cannot be increased until BYA has been eliminated. Members should also adopt a BYA for each former rating authority - each BYA must be reduced annually to become closer to zero until it is eliminated

2014 Act requires that there is consultation with MD members in the area

of the former rating authority (s29(4)) prior to the adoption of the BYA


Vacancy refunds

Legislation determines that owners of vacant premises are entitled to a refund of rates if their property was vacant on the date of the making of the rate.

The Local Government Act 1946 provides that the owner of vacant premises is entitled to a 100% refund in most local authority areas. Separate legislation governs refunds in the cities of Dublin, Limerick and Cork, where the same criteria for refunds apply but only 50% of the rates paid is refundable.

Local Government Reform Act 2014 provides local authorities with the discretion to vary the rate of refund (0-100%) that applies in individual local electoral areas.

The Local Government (Financial and Audit Procedures) Regulations 2014 provide that the decision to alter the rate of refund should be taken at the annual budget meeting and that the rate of refund decided in respect of the relevant local electoral area shall apply to eligible persons for the year to which the budget relates. The absence of a decision to vary the refund means that the existing legislative provisions regarding the rate of refunds apply (either 100% or 50% as set out above).


Summary of rates decisions to be taken at the annual budget meeting

In 2015, Councils will be required to -

adopt ARV for the county/ city as a whole (this cannot be increased until harmonisation has been achieved); and

decide if they want to alter vacancy refunds available in 2015 and if so, what rate and for which LEAs.

From 2016, Councils will be required to –

adopt ARV for the county/ city as a whole (this cannot be greater that the ARV adopted for 2015 until harmonisation has been achieved);

reduce the BYA that applies in each former rating authority area; and decide if they want to alter vacancy refunds available for each specific year and if

so, what rate and for which LEAs.

There are six statutory tables included in the budget documents (Tables A-F).

1)Table A – Calculation of Annual Rate on Valuation Including BYA

2)Table B – Detailed Expenditure & Income 3)Table C - Rates information including BYA (updated format

for 2015)4)Table D – Analysis of Budget Income from Goods & Services5)Table E – Analysis of Budget Income from Grants & Subsidies6)Table F - Detailed Expenditure and Income by Division

New Structure to Budget Format/Documents was introduced in 2009 with a move to a service costing based structure (Service Support Costs – Full cost disclosure for delivery of each service)

Services and Sub Services are rolled up into 8 Division Groups

Table B & F – Detailed Expenditure & Income

8 No. Divisions (A-H) & Central Management Charge Division

1. Division A – Housing & Building

2. Division B – Road Transport and Safety

3. Division C – Water Services

4. Division D – Development Management

5. Division E – Environmental Services

6. Division F – Recreation and Amenity

7. Division G – Agriculture, Education, Health & Welfare

8. Division H – Miscellaneous

9. Division J – Central Management Charges

Division

Description Current Expenditure Current Income

A Housing & Building

LA Housing Repairs & Maintenance CostsTraveller AccommodationEstate ManagementAssistance to persons housing themselves (Housing Loans & Grants)RAS ProgrammeLoan ChargesService Support Costs- Direct Salaries & Staff Costs- Direct O/Heads- Central Management Charge- Indirect O/Heads

Housing RentsRecoupable SalariesRecoupable GrantsRAS Payments Recoupable Payments

B Road Transport & Safety

Road Upkeep & Maintenance CostsRoad/Footpath Improvements Public Lighting Road Safety & Traffic Management & Control Loan Charges Service Support Costs Central Management Charge

Road Grants – DOE Fund Parking Fees Road Opening Fees Hackney Licences Recoupable Salaries /Grants

C Water Services Public water & sewerage supply – Service Level agreement with Irish Water Public Conveniences Group Water Schemes Service Support Costs Central Management Charge

Irish Water Income – Service level agreementGrants – DOE Fund Recoupable Grants/Salaries

Division


D Development Management

Planning Control & EnforcementTaking in Charge of EstatesUrban/Village Renewal Tidy Towns Community & Enterprise Tourism Development Local Enterprise OfficesLocal Community Development Committee Service Support Costs Central Management Charge

Planning App. Fees Licence Fees Urban Renewals Grants Recoupable Grants/Salaries

F Recreation & Amenity

Op. Costs – Recreational Centres , Libraries , Public AmenitiesCommunity, Sport & Recreation DevelopmentMaintenance of Parks / Open SpacesArts/Cultural CentresArts ProgrammeHeritage ServiceService Support Costs Central Management Charge

Charges – Recreation Centres Libraries & Public AmenitiesRecoupable Grants/Salaries

G Agriculture, Education, Health & Welfare

Land Drainage River Cleaning Veterinary ServiceService Support Costs Central Management Charge

Recoupable Salaries /Grants

Division


H Miscellaneous Financial Management Costs for Collection of Rates Legal, Printing & Stationery Irrecoverable Rates Elections & Audit feesAdmin of Justice/Consumer

- Coroners Fees Food Safety Councillors & SPC CostsMotor Tax OperationService Support Costs Central Management Charge

Sale of Election Registers Licences (Dog Licences) Recoupable Grants/Salaries – Motor Tax

J Central Management Charge

Corporate Building CostsCorporate ServicesInformation TechnologyPrint/Post RoomHuman Resources & FinanceFunctionPensionsDistrict Offices

Table F Division A - HOUSING AND BUILDING - Pg 1 Table F Division A - HOUSING AND BUILDING -

Pg 2

Expenditure by Service and Sub-Service Adopted by

Council Expenditure by Service and Sub-Service Adopted

by Council

Code € Code €

A0101 Maintenance of LA Housing Units

1,567,725 A0501 Homeless Grants Other Bodies

186,000

A0102 Maintenance of Traveller Accommodation Units 60,138 A0502 Homeless Service

111,744

A0103 Traveller Accommodation Management

168,549 A0599 Service Support Costs

22,844

A0104 Estate Maintenance -

A0199 Service Support Costs

734,715 Administration of Homeless Service

320,588

Maintenance/Improvement of LA Housing Units

2,531,127

A0201 Assessment of Housing Needs, Allocs. & Trans. 57,500 A0601 Technical and Administrative Support

85,748


357,915 A0602 Loan Charges

1,535,906

Housing Assessment, Allocation and Transfer

415,415 A0699 Service Support Costs

341,937

A0301 Debt Management & Rent Assessment

176,344


298,179 Support to Housing Capital Prog.

1,963,591

Housing Rent and Tenant Purchase Administration

474,523

A0401 Housing Estate Management 55,000 A0701 RAS Operations

2,765,500

A0402 Tenancy Management 9,400 A0702 Long Term Leasing

400,540

A0403 Social and Community Housing Service 10,000 A0799 RAS Service Support Costs

316,398


176,969

Housing Community Development Support

251,369 RAS Programme

3,482,438

Table F Division A - HOUSING AND BUILDING - Pg 3 Division A - HOUSING AND BUILDING - Table F - Income

Expenditure by Service and Sub-Service Adopted by

Council Income by Source Adopted by

Council

€ €

A0801 Loan Interest and Other Charges

334,476

A0802 Debt Management Housing Loans -


198,400 Government Grants & Subsidies

Housing Loans

532,876 Environment, Community and Local Government 6,013,469

A0901 Disabled Persons Grants

1,200,000

A0902 Loan Charges DPG/ERG 16,150 Total Grants & Subsidies (a) 6,013,469

A0903 Essential Repair Grants -

A0904 Other Housing Grant Payments 14,000 Income from Goods and Services

A0905 Mobility Aids Housing Grants -


184,014 Rents from houses 4,739,200

Housing Loans Interest & Charges 222,054

Housing Grants

1,414,164 Superannuation 91,753

Agency Services & Repayable Works -

A1101 Agency & Recoupable Service - Local Authority Contributions 3,500

A1199 Service Support Costs - Other income 245,180

Agency & Recoupable Services - Total Goods and Services (b) 5,301,687

Service Division A Total - Housing & Building 11,386,091 Total Income c=(a+b) 11,315,156

Financed by Other Income/Credit Balances

Provision for Credit Balance - -

Local Government Fund /General Purpose Grant/LPT 16,228,046 16,228,046

Pension Related Deduction 1,108,226 1,108,226

+ / - Base Year Adjustment - Dissolved Rating Authorities -202,862

Sub - Total (B) 17,133,410

Net Expenditure to be Financied by Commercial Rates 13,565,244

Amount of Rates to be Levied C=(A-B) 13,565,244

Net Effective Valuation D 228,886

General Annual Rate on Valuation C/D 2015 59.27

General Annual Rate on Valuation - 2014 59.27

% Increase in ARV 0%

Commercial Property with a Ratable Valuation of €100 - 2015 Rates€100 x 59.27 =

€5,927

Revised Table C Base Year Adjustment 2015 - Former Town Councils

A B C D E F

Annual Rate on Valuation 2014

Annual Rate on Valuation 2015

Base Year Adjustment Net Effective Valuation

Value of Base Year Adjustment Effective ARV 2015

A -B C x D

€ € €

Name of County

ABC County Council 59.27 59.27 123,304 - 59.27

Name of Town

Town Council - D 57.68 59.27 - 1.59 58,624 - 93,212 57.68

Town Council - E 57.13 59.27 - 2.14 39,500 - 84,530 57.13

Town Council - F 55.90 59.27 - 3.37 7,458 - 25,120 55.90

TOTAL - 7.10 228,886 - 202,862

Commercial Property in former town council area D with Ratable Valuation of €100 - 2015 Rates

2015 Valuation €100 x 59.27 €5,927

BYA Credit €100 x -1.59 -€159

2015 Rates Due €5,768

Annual Financial Statements (AFS) - End of Year Accounts AFS – Actual Income & Expenditure & Balance Sheet

(Details of all Fixed Assets owned by the Local Authority) Annual AFS are audited by Local Government Auditor Local Government Auditor deals with:

• Verification of accounts as shown in AFS • Prevention/Detection of fraud/error • Value for money

AFS & Auditors Reports are submitted to Council Chief Executive & Audit Committee for consideration and have authority to seek a meeting with Local Government Auditor.

AFS & Auditors Reports are submitted to members for approval and Local Government Auditor has authority to seek a meeting with the elected members to discuss if they so wish.

Schedule of Municipal District Works – January 2015

Following the adoption of the budget, a schedule of proposed works in each municipal district shall be prepared under the direction of the Chief Executive.

The schedule of municipal district works shall be considered by the municipal district members concerned and be adopted by resolution, with or without amendment .

AILG Training Seminar for Elected Members

Local Authority Finance & Budgets

Questions????

AILG Training Seminar for Elected Members Local Authority Finance & Budgets Tom Moylan.

Documents

local government act

valuation arv

rating authority s294

rating authority areas

single rating authority

amalgamated authority

local services

md members