The potential impact of escalating cuts to a rates subsidy for poor councils is a major worry as Derry City & Strabane District Council prepares to strike its rates for 2018/19.
The council was forced to cope with a 4 per cent drop in its Rates Support Grant (RSG) subsidy last year. This reduced its allocation from £3,756,990 to £3,607,114.
The reduction created a “significant in-year financial pressure for council” as the “cut was not advised until well after council had struck its’ District Rate for 2017/18 in February 2017,” according to the council’s Lead Finance Officer, Alfie Dallas.
But as officers and councillors try to agree the property tax rate for next year, they have been warned by the Department for Communities (DfC) to prepare for even more swingeing cuts.
Mr. Dallas told the council’s Governance and Strategic Planning Committee’s recent January meeting that: “Officers have been advised to plan on the basis of the original 4 per cent cut for 2017/18 plus a further 4-7 per cent cut for 2018/19. This equates to a total cut of 8-11 per cent since Council’s had to strike their District Rates in February 2017.”
The council has war-gamed a 9 per cent scenario ror 2018/19 and found this would have a big impact.
“Members will note a £318k impact on this council which equates to a 0.62 per cent overall rates or service impact
“This is a very serious concern for the upcoming rates estimates process. As an example, should council use this funding as loan charge provision for capital projects, this would provide capital investment of £4.7m over a 25 year period,” Mr. Dallas warned.
Sinn Féin Colr. Mickey Cooper said the prospective cuts were shortsighted.
“Ultimately, this will cost DfC because the £4.7m we can leverage for capital projectswith that £300,000 is going to end up costing Central Government,” he maintained.
SDLP Colr. Martin Reilly said the rates subsidy needed to be ring-fenced and observed that the looming cuts in prospect were yet another indication of why the Executive needed to be restored immediately.