Almost half the local councils registered a deficit last year, according to a review by the National Audit Office.

The picture painted by the detailed analysis showed a worsening situation as the number of councils in the red went up to 32 in 2012 from 22 the previous year.

Eight councils registered deficits for three consecutive years and according to the NAO, in 25 localities the deficits triggered a liquidity problem.

A calculation performed by this newspaper – the deficit as a percentage of the locality’s total income – showed that Floriana topped the list with a deficit to income ratio of 27.9 per cent.

It was followed closely by Żebbuġ, Malta, with a deficit of 26.5 per cent and Kerċem with an imbalance of 21.3 per cent.

The Mosta council got special mention with the NAO reporting that it could not express an opinion on its financial statements for the third year running.

A recurrent concern that has caused serious liquidity problems in a large number of councils is the public-private partnership scheme for road resurfacing.The normal procedure is that a fixed percentage of the cost is financed by the government with the balance being paid by the council over a period of eight years.

“In a number of instances involving councils facing liquidity problems, these problems render the situation even more problematic,” the NAO said.

Councils also experienced difficulties collecting money owed to them, especially through the local enforcement system.

But the NAO noted that despite the precarious financial position, certain councils still made additional capital commitments running into the hundreds of thousands of euro.

The analysis to be found in the annual audit of government finances presented to Parliament last week which also showed there were eight councils that had more than a million euros in income.

Birkirkara topped the list with an overall income of €1.6 million followed by St Paul’s Bay with an income of €1.5 million. The figures for income include the government allocation, any special funds given by the government and other income such as fines.

St Paul’s Bay received the highest government allocation based on its population size and land area.

Deficit* screamers

27.9% Floriana
26.5% Żebbuġ, Malta
21.3% Kerċem
20.2% Mosta
18% Qormi

*Deficit worked out as a percentage of a locality’s total income.

ksansone@timesofmalta.com