The Minister for the Environment, Mr Cullen, will announce a further increase in Government funding for local authorities tomorrow, ensuring the total extra money for 2004 will more than match the outstanding cost of benchmarking pay awards.
Tomorrow's addition will follow a €38 million increase for the fund announced in the Government spending Estimates last month, and a further €30 million announced by the Minister for Finance, Mr McCreevy, in the Budget. The total increase will exceed the €80 million still required by local authorities to pay the agreed benchmarking pay rises.
Local authorities had feared the increase for 2004 would be little more than 5 per cent, leaving them far short of the amount needed to fund the pay awards. Such a shortfall would have put pressure on councils to increase substantially local service charges to pay the bill.
However, a source close to Mr Cullen said yesterday that the Exchequer funding for local authorities was now set to rise by over 11 per cent.
This meant any increases in service charges could be used to pay for the maintenance and improvement of services rather than to meet the additional pay bill.
"In securing this money, the Minister has largely resolved the concerns about the benchmarking bill faced by local authorities," the source said.
"He has removed the need for major increases in local charges. He has ensured local government services will be strong next year."
The total cost of paying benchmarking increases to local authority workers next year is around €140 million. With local managers having found some €60 million already towards this cost, the increase in the value of the fund will more than match the outstanding €80 million, the source said.
The local authority fund for 2003 amounted to €626 million. The increased allocations will bring it to more than €700 million.
When the allocation to the non-national roads fund - the other element of central government funding of local authorities - is announced in January, the total allocation is expected to come to some €1.2 billion.
The Fine Gael environment spokesman, Mr Bernard Allen, warned in October that benchmarking payments for local authority staff could impose a cost of €125 on each of the 1.25 million households in the State.
However, the Exchequer funding will ensure that service charge increases imposed by local councils next year can be directed towards maintaining and enhancing services rather than being swallowed up by the pay bill.
The Exchequer contributes some 25 per cent of the total cost of running local authorities, with the remaining 75 per cent coming from local charges and levies.
Mr Cullen told the Dáil last week he would announce the full allocation this week.