A proposed system for calculating central government grants to local authorities would see an extra spend of €48 for every person in Donegal
Donegal County Council would receive an increase in its Government funding of close to 50% if a different methodology for estimating top-up grants was introduced, researchers at NUI Galway say.
Researchers at the Whitaker Institute in NUI Galway say fiscal equalisation would equalise the differences in revenue-raising capacities of local authorities. Under the new model, Donegal County Council would receive the largest top-up grant. Based on 2017 figures its grant would increase from €16.4m to more than €24m, an increase of €7.6m. The proposed system would see an extra spend of €48 for every person in the county.
The proposed system would see 22 local authorities receive equalisation grants totalling almost €210m of funding from central government. The revenue equalisation model proposed is commonly used internationally, the authors of the study say, “with the equalisation transfers based on a well-designed formula, objective and quantifiable data and estimates of fiscal capacity”.
Stephen McNena co-author of the report from the JE Cairnes School of Business and Economics, NUI Galway, said currently, the so-called equalisation grants are funded primarily from the 20% of Local Property Tax receipts that are pooled and redistributed as additional payments to councils with smaller revenue bases, with the allocation based on historical baseline supports.
“Of the 31 local authorities, 20 are in receipt of these payments, totalling €133.5 million for the year 2021. The local authorities that currently receive the biggest grants in euro terms are Tipperary, Donegal, and Mayo County Councils, and Waterford City and County Council."
The local authorities that would receive the largest grants are Donegal, Galway, Meath, Laois, and Wexford County Councils. Nine local authorities would get less funding under the proposed system.
Dr Gerard Turley, co-author of the study said: "As for the sensitive issue of the losers, alternative sources of funding include, if the fiscal space allows, higher taxes locally levied on commercial and/or residential properties, or in cases where it is deemed necessary, a temporary transition payment from central government. Either way, our new model provides for a local government funding model that is more transparent, sustainable and, most importantly from the perspective of financially weaker local councils providing comparable levels of public services, equitable."
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