Limerick council approves €27.5m overdraft

Nick Rabbitts

Reporter:

Nick Rabbitts

Concerns were raised in the chamber about the council's exposure to debt
COUNCILLORS have approved an overdraft facility worth some €27.5m, meaning the local authority could potentially find itself up to €57m in debt.

COUNCILLORS have approved an overdraft facility worth some €27.5m, meaning the local authority could potentially find itself up to €57m in debt.

This time last year, the council approved the drawing down of a loan worth €30m on top of the overdraft which was renewed at a slightly lower level.

Although the overdraft was never used, councillors have expressed concerns over the exposure of the authority to big debts.

There was also concern after it emerged that councillors will have no say if the executive did want to dip into the overdraft, with this needing only ministerial approval.

Director of finance Tom Gilligan said the overdraft facility had reduced from a high of €37.5m in recent years.

He said: “The overdraft facility is like having insurance. It is something we hope we never use. But if we do use it, we are damn glad it is there.”

But Cllr James Collins, Fianna Fail, said perhaps it might be “more prudent” to reduce the fund down to between €7m and €10m.

“We all agreed the overdraft was expensive. This is why we applied for a €30m loan. As a local representative, I am concerned about our exposure. There is nothing to stop the executive spending €57m without coming to the chamber,” he said.

His colleague in City West, Fine Gael councillor Daniel Butler added: “I feel uncomfortable giving you free reign over that amount of money without coming back to the chamber. It would be irresponsible of me to support this.”

But Mr Gilligan said it “would not make sense” to come back to members each time they wanted approval to dip into the overdraft.

Despite these concerns, the overdraft was approved without a vote.

Speaking outside the chamber, Cllr Collins said: “The councillors have a role when we dispose of land, but we have no say when we want to purchase anything. They could use the €30m loan to purchase strategic sites, but we will have no say if they want to dip into the €27.5m after today.” He criticised what he described as a “dismissive” attitude from the executive.