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Capital Expenditure
Current Expenditure
Audit of Local Authorities
Business Improvements Districts Scheme
Local Authority Key Financial Data

In terms of local government finance, the Department is focused on the financial well-being and effective financial management and accountability of local authorities and the promotion of value for money principles in the sector.

Capital Expenditure

Capital expenditure is expenditure that results in the creation of an asset beyond the year in which that asset is provided eg houses, swimming pool, library etc. It is financed largely by State grants with the balance being funded from development levies and borrowings and own internal resources and property sales. In the case of some projects (e.g. local authority offices) they may be funded entirely by local authority own resources and borrowing.

Current Expenditure

A local authority’s annual budget represents current expenditure (sometimes referred to as revenue expenditure) which covers the day-to-day running of the local authority (including staff salaries, housing maintenance, pensions, operational costs of treatment plants etc.). The annual budget is adopted by the elected council at its budget meeting.

Current expenditure is funded from a variety of sources, as set out below, although the specific contribution of income from the different sources may vary between authorities.

Charges for Goods and Services

Local authorities have powers to charge for services which they provide, for example, commercial water charges, housing rents, waste charges, parking charges, planning application fees. In most cases the charge or fee is set locally although certain charges or fees are fixed at national level.
Rates

Rates, as well as charges for goods and services, are local sources of income over which local authorities have a considerable measure of control, while specific and general purpose grants are paid annually to local authorities by the State. Rates are levied annually by county, city, borough and certain town councils. Each of these authorities has exclusive rating jurisdiction within its own area. Some town councils are not themselves rating authorities and there is an additional charge to the county rate levied on such towns to meet the expenses of the town council.

As a general rule, rates are levied on the occupiers of commercial property. The valuation of such property for rating purposes is carried out by a central government agency, the Valuation Office, with a right of appeal to a Valuation Tribunal. Each year the level of the rate (known as the Annual Rate on Valuation or ARV) is determined by the elected council as part of the budgetary process. The annual rates bill for a commercial premises is calculated by applying this ARV to the valuation of the property concerned. (See Key Financial Data/Charts under for detailed information on local authority ARVs).
Specific State Grants

Specific State grants are paid to local authorities in respect of specific services/schemes, for example higher education grants, road maintenance grants, etc by a number of government departments.
Local Government Fund - General Purpose Grant

The Local Government Fund (LGF) is a special central fund which was established in 1999 under the Local Government Act 1998. It is financed by the full proceeds of motor tax and an Exchequer contribution. The Fund provides local authorities with the finance for general discretionary funding of their day-to-day activities and for non-national roads, and funding for certain local government initiatives.
Community Fund/Community Initiative Scheme

An elected council may, by resolution, establish a separate ‘community fund’ to support specific community initiatives such as amenity, recreational, environmental or community development projects of benefit to the area concerned. Contributions to the community fund may be made by local voluntary, business or community groups, and may be raised by the local authority by way of a community initiative scheme. It is a matter for the elected members to decide whether to adopt a community initiative scheme, following a process of local consultation. Such a scheme is based on the payment of an annual contribution by each household for a specified number of years towards a particular community initiative of benefit to the local community. Details of the project, the amount of the annual contribution, waiver arrangements, the period for which it is operable and the area to which it applies must be set out in the scheme (sections 109 – 110 of the Local Government Act 2001 refer).
Non Principal Private Residence Charge

The Government decided to broaden the revenue base of local authorities through a charge on non-principal private residences, which is set at €200 per dwelling and is levied and collected by local authorities. The income from the charge is used by local authorities to support the provision of local services and is retained by the individual local authorities that collect it.

The Local Government (Charges) Act 2009, which sets out the detail of the charge, is structured with a starting position of a universal liability for residential property in respect of the charge. It goes on to exempt certain buildings and owners from this liability, the most important exemption being where a property is occupied by the owner as his or her sole or main residence on the liability date.

The charge can be viewed as a type of self-assessment measure because it is for the owners of residential property, in the first instance, to assess whether they are liable to pay it.

Liability arises each year on a point in time basis known as the liability date. 31 July was designated as the liability date for 2009. For 2010 and for subsequent years the liability date is 31 March. A late payment fee of €20 per month arises three months following the liability date if the charge remains unpaid.

Payment is accepted on behalf of any local authority through a web-site (http://www.nppr.ie/) designed and constructed by the Local Government Computer Services Board. Payment is also accepted locally in local authority offices. Further information on the charge is available at http://www.nppr.ie/

Audit of Local Authorities

The accounts of local authorities, both current and capital, are audited by local government auditors who are independent in the performance of their functions and are under the general control of a Director of Audit. Local authority staff and elected members have a statutory duty to co-operate with them. An auditor may disallow illegal or unfounded payments, surcharge such payments on the persons responsible whether on members or the manager, and charge on the person the amount of any loss or deficiency incurred through misconduct or negligence.

Following receipt by the local authority of the audited AFS and any auditor’s report, the manager must submit both for consideration by the elected council. The Code of Audit Practice, which is applied by local government auditors in the audit of financial statements, is available from the Local Government Audit publications area of this site.

Value for Money (V.F.M) reports covering a broad area of local authority activities have been issued promoting efficiency and cost effectiveness in local authorities. Where appropriate, the implementation of the recommendations contained in the reports are monitored at the annual audit of the individual local authority annual financial statements. (See Local Government Audit Service publications on this site for recent VFM reports).

Business Improvement Districts Schemes

A Business Improvement District Scheme (BIDS) is an organisational and financing mechanism, with a legal basis, through which businesses can, on a self-help basis, develop and implement initiatives, in defined areas, to improve those areas for the betterment of the trading environment in which they operate.

Essentially, in a BID scheme, a group of businesses come together and decide firstly that they want enhanced services or a wider range of services, or new facilities or activities in an area. Secondly, these businesses decide that they are willing to pay for such services, facilities or activities. A specially established BID company is charged with responsibility for implementing the provisions of the BID scheme. The local authority plays a key role in any such company. In addition, the local authority collects the annual BID contributions that fund the scheme.

Further details are provided in the BIDS legislation in the legislation area of the website.