Local authority rate hikes amid the energy, inflation and cost of living crises are “another nail in the coffin” for already struggling businesses and will render many unviable.
That was the warning from Mike Ryan, chairman of the Cork branch of the Restaurants Association of Ireland, after members of Cork City Council approved a 3.8% hike in commercial rates when passing the 2023 city budget. Rates had only increased by 1.2% in total over the previous 13 years.
The rise in Cork follows a 4% rise in fares by Dun Laoghaire Rathdown County Council and a 3.5% rise in Leitrim, with a 2.5% rise on cards in Clare.
Mr Ryan, who runs Cornstore and Coqbull restaurants in Cork, said the extra operating costs would make many businesses unviable.
“After the massive increases in gas and electricity costs, it’s now getting to the point where it’s becoming almost impossible to sustain a business,” he said. “Hospitality and retail have been hammered in recent years. Subsidies help, every little bit helps, but increases like this also hurt. They seem to be giving with one hand and taking with the other. I think some businesses will be able to hang on for the next six to eight weeks, but we’ll see a different landscape in January.”
Councilors voted 24-5 to pass a budget that will see some €268m spent on service delivery next year, up €28m from the 2022 budget.
The main contributors to the increase in expenditure are an increase of €4m in the housing budget, an increase of €9.3m in the wage bill due to national wage agreements, an increase of €8m in energy costs, a €500,000 supplement to homeless services and road surfacing, and a €1.8 million increase in a grant from Transport Infrastructure Ireland.
There will be no increase in car parking rates, which were increased in the 2022 budget.
In her report, council chief executive Ann Doherty said government fee waiver schemes introduced during Covid came to a halt earlier this year. She pointed to the cumulative 1.2% increase in commercial tariffs since 2009, well below the rate of inflation over this period.
But Cork House chief executive Conor Healy said businesses were footing the bill for “a legacy of underfunding of city and county councils” by the central government.
“While rebate programs will help, these increases will be a burden on many already struggling businesses,” he said. “The board should continue to invest significantly in economic development and marketing activities, which would generate additional business to offset some of the impact.”
Fianna Fáil councilor Sean Martin, chairman of the council’s finance committee, defended the government and said the council’s budget in 2019 was €166 million, and now stands at €268 million , with government grants increasing steadily over this period, from €32 million in 2019 to almost €. 91 million this year.
However, independent adviser Paudie Dineen described the rate hike as “an affront” to small businesses. Independent adviser Ken O’Flynn said it would likely have a devastating effect on many businesses.
Councilors were also told that new bike lanes and pedestrianization have cost more than 440 parking spaces over the past three years, representing a significant loss of revenue for the city.
Ms Doherty said the council will need to budget for significantly lower levels of parking revenue to fund future budgets.
Councilors are due to get a debriefing next month on roadworks and traffic changes around the city center amid growing congestion complaints.
Motorists blamed the congestion on work on the north quays combined with changes in traffic flow associated with the regeneration of MacCurtain Street to provide infrastructure for buses, bicycles and pedestrians.
The city council said the existing road network cannot accommodate further increases in the number of passenger cars and that plans to create efficient bus services as well as the continued development of cycling and pedestrian infrastructure are needed.