From boom to bust? The financial performance of city and county councils

Abstract

A framework to assess the financial performance of city and county councils in Ireland is applied to the recent boom and bust period. Based on previous work, our financial performance measurement framework assesses performance in the areas of liquidity, autonomy, operating performance, collection efficiency and solvency using the audited published financial statements of Irish local authorities. Financial indicators for the years 2007 and 2011 are developed and reported to capture the boom and bust years, respectively. Overall, the results indicate that the majority of Irish city and county councils performed satisfactorily in a financial sense relative to central government performance despite the downturn in economic activity and the resulting fall in council income. The paper suggests a small but increasing number of county councils are exhibiting signs of financial difficulty, with poor levels of revenue collection, increasing provisions for bad debts and rising debt levels. In light of the recent boom and bust in the Irish economy and the growing importance of performance measurement in a reforming public sector, we recommend adoption of the financial performance measurement framework as part of the annual financial statements of Irish local authorities.