Donegal Co. Council is set to slash expenditure on major road, housing, water and sewage treatment programmes in the next few years.
And there could also be cut-backs on a range of community based projects ranging from libraries to playgrounds.
Hundreds of millions worth of projects face being delayed or shelved.
Although the Council has identified a list of projects – many of which are regarded as urgent – it now looks increasingly likely that it will not have enough money to start or complete many of them.
The collapse in the construction industry is one of the chief reasons for the financial headache now facing the Council.
The Council funds the bulk of its major projects through grants which it receives from the government.
However, in recent years it has also raised money through the Development Contribution Scheme. In effect, this was a levy on the construction section with the money being used to towards major projects.
But the DCS has now come up short. Indeed, the revenue from the DCS is already below estimates for projects that are already underway. Figures released this week show that projected DCS funding for the period 2005 – 2009 could be €10.15 million less than expected, and DCS revenues for the next few years are not projected to exceed €1.2 million per annum.
Often the Council uses DCS money – and sometimes loans – to part-finance between 10 and 50% of the cost of a project.
The problem that the Council now faces is that not only will government grants be cut – but it can’t even afford to raise the money to finance its share.
On top of this, the Council now has little scope regarding the disposal of assets. In the past, it often sold surplus land or old buildings to help fund new projects. However, the collapse in the property market and impact on prices means that the value of the Council’s surplus assets has also declined.
The Council oversaw record expenditure of €772 million during the years 2005 – 2009. Expenditure peaked at €270 million in the boom year of 2007.
The Council’s priority projects for the period 2010-2012 include the Killybegs and Letterkenny waste water schemes, and the redevelopment of Greencastle harbour.
Roads and housing programmes are set to be cut-back. No figure on the cost of capital projects between 2010 – 2012 has been finalised, but a report on the priority projects will be given to councillors later this month and they will then meet to decide on what projects should get funding.