Councillors to debate €224 million budget as 5% commercial rates hike proposed

Councillors will meet in County House, Lifford, on Friday 21 November to discuss Donegal County Council’s 2026 budget.

Chief Executive John McLaughlin has outlined the council’s plan to spend €224 million on day-to-day services while also setting aside funds for future development. The overall budget represents an increase of just over €21 million - approximately 10% - on what the local authority is on track to spend in 2025.

The council executive is recommending a 5% increase in commercial rates - a rate that has been frozen since 2018.

Describing it as a “very challenging” budget to bring forward, both Mr McLaughlin and financial director Richard Gibson have emphasised the impact inflation has had over the past seven years in eroding the council’s purchasing power.

The council estimates that an additional €1.76 million would be collected from commercial ratepayers across the county should councillors vote to approve the increase.

In 2024, councillors approved a 15% increase over and above the baseline rate for the Local Property Tax (LPT) paid by homeowners from 2025-29. The council executive estimates this to be worth approximately €1.53 million a year.

The draft budget provides €925,000 for the Development Fund Initiative, giving each of the county's 37 councillors €25,000 to disburse to worthy causes locally. A further €370,000 is earmarked for member development funds, €370,000 for public lights and minor infrastructure, and an additional €205,000 for the maintenance of housing estates. Mr McLaughlin has warned that these provisions cannot be made without the proposed increase in commercial rates.

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He said that Donegal County Council has successfully competed for and secured central Government funding for capital projects worth €230 million - including Repowering Buncrana and upgrades to harbours and piers - which require up to €70 million in match funding from the council. The council has already borrowed €35 million to meet these commitments and intends to continue seeking similar funding in the coming years. The 2026 budget sets aside €1,050,000 in seed money, which will allow the council to borrow up to €15 million towards its match-funding obligations.

Overall, the council forecasts that it will collect €41.4 million from commercial rates in 2026 and €28.9 million from the LPT - although only €11.7 million of the LPT is collected in Donegal, with the remaining €17.2 million provided through central Government funds.

In addition to income from commercial rates and the LPT, the council’s other revenue sources include rents, fees, charges, loan repayments, grants, recoupments, internal capital receipts and reserves.

At €103.6 million, payroll and pension costs will be up by €3.5 million next year and account for almost half of the council’s €224 million annual budget. This increase is driven by national public service pay agreements, the implementation of the local authority’s workforce plan, and the resources needed to meet rising service demands.

The payment of grants (€31.3 million), contract payments (€29.3 million), the purchase of equipment and materials (€20.1 million), and the broad category of “other administration and operational expenses” (€17.3 million) make up the next largest areas of expenditure.

Last year, councillors rejected a proposed 4.4% increase in commercial rates. It took three meetings for the budget to gain majority support from the 37 councillors, and then only after the council executive shaved €1.5 million from projected expenditure for 2025.