Dáil Éireann Debate, Wednesday - 8 October 2025
95. Deputy Paul Murphy asked the Minister for Housing, Local Government and Heritage if he is satisfied with the level of funding provided for local authorities in Budget 2026; and if he will make a statement on the matter. [53816/25]
Amharc ar fhreagraThe funding system for local authorities is a complex one, as authorities derive their income from a variety of sources including commercial rates, charges for goods and services, Local Property Tax (LPT) as well as funding from Government Departments and other bodies. Central Government funding of local authorities similarly presents a complex picture, with transfers, both current and capital, coming from a wide range of Departments and Offices for a variety of purposes. Funding for local authority functions that may come within the area of responsibility of other Departments is a matter for the relevant Minister. It is also a matter for each local authority as to how it can maximise local income sources and manage its own spending, in the context of the annual budgetary process.
That said, I acknowledge the current financial environment in which all local authorities, are operating, and the pressures facing them in respect of general inflation and higher costs. Every effort has been made to provide support to the sector in the delivery of its functions.
Local Authorities are key stakeholders and partners for delivery across a wide range of areas under the remit of my Department. In terms of programme funding for housing, the combination of capital funding secured under the NDP and current funding under this Budget will enable continued delivery of services across the board to the citizens reliant on local authorities for housing and housing related services.
My Department, through the Local Government Fund, will be making a contribution of over €670m million to support the local government sector in its vital work during 2026. This represents a year-on-year increase of €80m million in funding from the Fund.
Of this, €110m is towards fund LPT equalisation; to ensure that all local authorities, including those with weaker property tax bases, have a minimum level of funding available to them that is separate to programme funding. Building on the baseline increases of 2024, there will be a further increase of €42m in 2026, which will ensure that any benefit from the revaluation of LPT will go directly to the sector where it is needed. In addition, the allocation model for 2026 is changed to allow those authorities with an LPT income above their baseline to retain a greater portion of the surplus for their own use, increasing from 22.5% to 31% of overall yield. Both changes together will lead to an increase in own use funding in the overall sum of €85.4m; a substantial increase in recognition of the challenges facing local authorities in respect of increasing demands and higher prices.
Also included is a sizeable contribution of over €527m to cover the cumulative impact of National Pay Agreements on the sector in 2026. This allocation will ensure that local authorities will have the necessary resources in terms of people, to support their functions.
In line with commitments in the Programme for Government, a Local Democracy Taskforce has been established to reform and strengthen local government. The work of the Taskforce is focused across four themes. One such theme is the funding of local authorities. The Taskforce will bring forward proposals for Government consideration, including in the area of enhancing local authorities’ fiscal autonomy. I look forward to engaging across Government on these matters of importance to local democracy in advance of any proposals being finalised.
