Concerns over city boundary payments
“You can’t drive a ship like Cork City Council into a deficit budget."
Those were the words of its Chief Executive Valerie O’Sullivan as she expressed serious concern over the impact of boundary compensation payments the city must make to Cork County Council.
Since the boundary extension in 2019, Cork City Council has been required by legislation to pay annual compensation to its county counterpart for at least ten years. That annual payment now stands at €15.4 million – up by more than €2 million since the agreement began.
The administrative area of Cork City Council expanded nearly fivefold under the boundary changes, taking in areas such as Douglas, Rochestown, Ballincollig, Blarney, and Glanmire, and growing its population by around 85,000.
“It’s a huge challenge,” said Ms O’Sullivan. “The payment of the boundary compensation money to Cork County Council as a result of the extended city boundary in 2019 – it was wholly unsustainable.”
She made these comments during a recent meeting with the National Oversight and Audit Commission (NOAC), which provides independent oversight of local authorities.
She explained that the 10 year compensation deal is index-linked. However, she said no one could have predicted the changes in interest rates or the global events that followed.
“The agreement was made when no one could have foreseen the impact of Covid-19, the war in Ukraine, or the way interest rates would rise – all of which have increased the interest portion in particular.” Looking ahead, she added: “2029 is around the corner and we don't know what 2029 holds in terms of cessation or otherwise. We are working hard on that, I would say in partnership with Cork County Council, because they have to prepare for the cessation of the payment and we have to prepare for what will the outcome be.”
Independent Ireland TD Ken O’Flynn backed the chief executive’s position and called the current deal “economically irrational, politically outdated, and strategically harmful to Cork’s future”.
“What we are witnessing is the absurd spectacle of a modern city being financially penalised for expanding its own capacity to serve its citizens. Inflation, interest rates, and construction costs have skyrocketed. These payments are now diverting critical funds away from core priorities—housing, transport, community infrastructure, and urban renewal.”
Independent Cork City Cllr Kieran McCarthy added: “Concerns of the second city need to be acted upon. There have been several debates and several letters sent to the Department of Local Government calling for a review on the compensation and its inflation levels. To be honest, the replies have been poor. I have not seen anyone at government level delivering any sort of hope of a review. Cork City Council has many ambitions in its development plan and corporate plan, which need high levels of funding over several years and not having a high level of compensation to pay.”
From the County Council’s side, Fianna Fáil Cllr Gearóid Murphy said the agreement reached in 2019 was fair and properly negotiated.
“With regard to the compensation arrangement which began in 2019, I believe that the agreement reached was an equitable one, negotiated at arm's length between equal partners. While the agreement was made during a period marked by an unusually low rate of inflation, it would have been unrealistic to expect this to continue and this was not, I believe, an assumption which the agreement relied upon when it was made.”
The stakes are high, and the city council will certainly “be looking at what it pays the county council,” said City Hall's Head of Finance, John Hallahan.
He added: “The city needs money to keep its projects going, such as the Docklands and city centre developments. Funding is also much needed for housing, so the city will need to borrow in excess of €100 million.”
This article was produced with the support of the Local Democracy Reporting Scheme funded by Coimisiún na Meán.