paper analyses the effects of the economic crisis on local government budgets
in Ireland. In this context, it also examines the preceding period, namely the
impact of the economic boom on local government finances. We find that the
budgets of local authorities, as with the national budget, increased greatly
throughout the boom years. Although local authority spending increased, local
governments were not as profligate as central government during this period. As
for the economic recession, the evidence is of a lagged effect on local
government budgets, with no dramatic change in 2008, unlike the impact at the
central level. As with downturns elsewhere, the negative impact of this
recession on local authority budgets began to impact only after it had affected
the national budget. Falling local revenues combined with significant
reductions in central government allocations to local government have resulted
in expenditure adjustments as local authorities seek pay and non-pay savings.
We also show evidence of much cross-council variation in finances, with
particular regard to changes in rate income and central government grants.