Debt debacle makes Sligo County Council a laughing stock

Council now about to also take on debts of airport
Own debt load currently upwards of €120 million
Estimated €7 million costs still due for Lissadell legal proceedings
Local authority rescue plan for airport could cost Sligo more than a million euro
Commission of investigation

Sligo News File Online.

SCC Offices Sligo County Council’s debt debacle has turned the authority into a laughing stock. How did things get so out of control that the people are now left with the prospect of  having to foot the bill possibly for millions of euro in run up debts?

The people need answers that they have not been given to date, particularly as it is reported the Council is now about to also shoulder the debts of the region’s airport at Knock.

At this point, it is not clear what this collaboration with a few other local authorities to pay off the airport debt will cost Sligo. According to a due diligence investigation carried out by Deloitte, the airport needs a bailout package of nearly €40 million. Of this the local authorities, seven of them, including Sligo, are planning to provide a cash injection of more than €7 million, for which they will be given a relatively small stake in the airport.

Based on reports, it looks that over the years of the agreement the venture could cost Sligo in excess of a million euro. interest and other charges on the loan would be significant. Sligo County Council’s prevailing debt is currently upwards of €120 million, cumulative debt is around €19 million, additional to which it also has to raise a €10 million budget surplus over the next ten years. There are also fees and interest charges on the councils existing loans.  

Government “€100 million debt write off to Shannon”

It is believed that even if the airport is able to secure the required €40 million investment it will be still at least another eight to ten years before it is self-funding. Knock is also up against Shannon.

Former Knock airport Chief Executive Liam Scollan is reported to have said in an interview with the Mayo News that the government had taken a decision to “write off €100 million of debt in Shannon…There will also be a transfer of income from
Shannon Estates (a part of the larger Shannon Development Organisation) into Shannon Airport and what this means is that Shannon Development’s land banks and property expertise will be merged with Shannon Airport with a view to developing an international aviation services facility in the region. It is a transfer of considerable assets over to Shannon Airport which boosts them with an annual subvention or income to assist them to attract new routes and new businesses in aviation-related areas, maintenance etc. It is a massive cash injection.

“The airport is essentially getting its debt written off while also getting another significant financial boost.”

Ireland West airportThat, coming from its former chief executive, is not alone a revelation of the scale of what Knock is faced with, but also how Shannon has been boosted by the government at the expense of Knock.
 
However, if Mayo is prepared to put up the millions of euro the airport apparently needs, then good luck to them; quite obviously, they are in a better financial position to handle it than heavily indebted Sligo. They also stand to gain more from Knock, though,
that said, the successful operation of the airport is naturally of great importance  to the region as a whole. The Chief Executive Officer of Mayo County Council, Peter Hynes is chairperson of the airport trust.

Knock has announced that it attained a passenger throughput of 703,000 last year. As shown, however, the number would need to be well more than double that if the airport is just to break even.

British low cost carrier, Flybe has pulled out of the Knock-Birmingham route. BMI has also withdrawn. Recently Ryanair has reportedly announced that it is cutting its service between Knock and Gran Canaria this summer.

However, an issue which for some reason has been kept under the radar is why the Knock debts are not being picked up by the government. Why is the Coalition and local authorities proposing to lump the massive multimillion euro airport bill on to the shoulders of the people of the region – under existing provisions it is the people who have to foot the bill for local authority liabilities. After all, if the Coaltion was able to write off €100 million for Shannon, surely it should be possible for the them to take care of the many times smaller €9 million plus Knock debt as well.

However, a parliamentary reply issued to Clare Daly, TD demonstrably affirms that Sligo is not going to be given any government subvention or aid towards it proposed financial support for Knock.

Deputy Daly asked the Minister, Alan Kelly if his department planned to provide matching funds arising out of a recommendation of the Chief Executive of Sligo Council that the Council provide financial assistance to the airport. Minister Kelly told the TD “it is not my intention to provide matching funds…I have no function in the matter.” He said matters relating to airports are the responsibility of the Minister for Transport, Tourism and Sport, Pascal Donohoe. As far as is known, Donohoe also has not offered to provide Sligo County Council with matching finance towards Knock. His department’s junior minister, Michael Ring was in Sligo a few weeks ago, but the matter did not feature in any of his many speeches to local groups.

Sligo, therefore, is about against it on just about every front. This week, Councillor Tommy MacSharry proposed that part of the county council debt, the €7 million costs of the Lissadell case, be
passed to central government. After much discussion, the motion, with amendments, was supported by members of the council. There is, however, a view that the chances of a favourable outcome to it are slim.

Adding to its woes, the council is also facing possible industrial action by two hundred of its staff in a dispute over mandatory redeployment of workers. Nearly two hundred workers have already been laid off in the last few years. It is understood there is pressure on the council to redeploy further staff to other areas of the country, a situation that will mean not only workers and their families being uprooted from the community, but also serious consequences for the quality and extent of services to the public.

Commission of Investigation

By any reckoning, the scene that is Sligo County Council is certainly profoundly worrying, not least because, apart from asset disposal
and service cutbacks, there are few places other than the people of the county to which the Council can look to finance its debts and operations. Business that in better economic conditions would be flourishing, and providing commercial rates to the council, is instead, in numerous instances, seeing firms pulling down the shutters and a slump in commercial activity. Spending power has plummeted, and earnings from tourism are relatively limited and largely seasonal.

While there is no suggestion of any impropriety, the people of the county who are left with the daunting prospect of higher property tax, charges and levies, have the right to know how the disaster that is the council debt came about, and the likely implications for them.  A transparent and accountable examination is, therefore, now an imperative, and for that reason, and to restore the confidence of all in the council, a commission of investigation must be ordered by the government.

Answers are needed, and the sooner they can be  provided to the people of Sligo the better.