County Council facing 'financial crisis' due to war in Iran

Tipperary County Council are facing what one member described as a 'financial crisis' due to soaring fuel and material costs as a result of the ongoing war in the Middle East.

Director of Services, Mark Connolly, delivered a stark update on the financial challenges faced by the local authority at their monthly meeting in Nenagh on Monday.

The Council is facing a shortfall anticipated to be in the region of €1-million and are exploring additional streams of revenue from central government, as well as how savings can be made to protect delivery of frontline services.

"Sobering" is how one councillor described the current financial picture and members heard it may take years or even decades for fuel prices to return to pre-war levels. 

The local authority plan to invite Tipperary's Oireachtas members to one of their plenary meetings to impress on them the huge financial challenges faced by the local authority, which is expected to cause major disturbance to their roadworks program.

Since the start of the ongoing conflict in Iran and the closure of the Straits of Hormuz which caused the dramatic spike in prices Tipperary County Council purchased 144,000 litres of fuel to power their machinery yard.

Compared to the average price in January, the machinery yard have spent an additional €40k for fuel. The 13th and 15th of April saw restocking of fuel after the protests which brought much of the country to a standstill.

The council's machinery yard are constantly monitoring fuel costs and make purchases when the prices are most favorable. The soaring costs are not just restricted to fuel, with surface dressing chips and bitumen for making roads also seeing dramatic spikes.

The potential impact for the remainder of the year could be in the region €400k and it is anticipated fuel costs will increase between €350k and €400k if the crisis persists for the remainder of the year. Should the war in Iran deteriorate these costs could be significantly more, the meeting heard.

The additional costs are expected to have a direct impact on the delivery of their roads program in 2026. Between fuel and material costs increases the roads plan could face additional costs of €1-million.

The meeting heard that a number of suppliers have submitted requests for price increases in the last month, seeking uplifts in the region of 15%, which will not be considered until suppliers can demonstrate cost increases in accordance with the conditions of their contract.

Due to the wider central government budgetary environment becoming increasingly pressured  it appears unlikely that additional funding will be made available to the local authority sector to mitigate against the dramatic inflation in the cost of maintaining and improving Tipperary's road network.

Oil and gas price increases are expected to feed into general prices in the coming weeks and this will potentially have significant impacts on inflation on goods and services purchased and consumed by local authorities. 

As the war continues specific activities may need to be scaled back and there is a potential risk to the council income through commercial rates, Mr Connolly said. 

Every department in the council have been tasked with identifying savings of €100k over the remainder of the year and the ask is that the savings will have minimal impact on frontline services if possible. 

Any savings will be used in the second half of the year and the situation will remain under ongoing review, the Director of Services said. 

CEO of the local authority, Sinead Carr, told the members the soundings she has heard coming from government "is not positive," adding "we're going to be taking corrective actions from June," the CEO said.