Councils 'acting illegally'Eight local councils in Malta and Gozo are in the red by a total of €642,000, with two councils alone representing more than two-thirds of this overspending.
The Birkirkara council fared the worst until March, with a deficit of nearly €260,000, followed by that of San Ġwann with a loss exceeding €170,000.
However, the council's losses are nowhere near the record-breaking €641,000 registered by the Mosta local council in 1998. Neither is it uncommon for some councils to run deficits; there is usually an average of 12 defaulters each year. However, Birkirkara's 2008 deficit is the highest registered by any one council over the last five years, at least.
The majority of the big spenders in proportion to their budgets were councils in Gozo: Victoria, San Lawrenz, Fontana, Kerċem and Qala.
The other two councils running a deficit in Malta were Vittoriosa and Birżebbuġa.
Since March, Nadur, Qala, Xewkija and Xagħra managed to eliminate their deficits.
This is the tenth time in 15 years that the Vittoriosa local council has registered a deficit. Other record-holding councils include Birkirkara, which has gone into negative territory eight times in 15 years, Victoria and San Lawrenz, which both registered a deficit for seven years, and Kerċem, which was in the red for six out of the 15 years that councils have been in operation.
The mayors of the two most debt-ridden councils, Birkirkara and San Ġwann, said their council was taking corrective action to achieve positive balances again.
Birkirkara mayor Michael Fenech Adami said that, at a council meeting last week, the auditors had explained the situation and what the council needed to do to cut the deficit. He attributed the situation to projects that had not been budgeted for, such as changing of water pipes, and price increases of services used regularly by the council.
San Ġwann mayor Joseph Agius said the financial situation prevailed at the end of the financial year in March, when a Nationalist majority took over the council's leadership. Action was since being taken to address it.
"Ever since the council changed hands, the issue has been tackled and the council's finances are on the way to recovery. By the end of 2010, we expect to have a positive balance again," he said.
Asked to comment, the Parliamentary Secretary for Public Dialogue, Chris Said explained that, by going into the red, the councils were in breach of the financial regulations and, effectively, acting illegally. Councils should not run at a loss and, when this happened, the Department of Local Government intervened and monitored the councils more closely.
Instead of qauarterly reporting, such councils were asked to submit monthly accounts and a financial recovery plan was drawn up for the deficit to be eliminated, he said. In the meantime, the department would order the council not to make any new financial commitments, whether capital projects or other initiatives.
Dr Said, who is responsible for local councils, said the new Local Councils Act, as amended following the reform process, dealt with such financial situations in a better way.
Whereas, previously, the executive secretaries were finding it difficult to control the council's expenditure because they were considered to be council employees, answerable to the mayor, now they were accountable to the department and not the council.
He said the responsibility for a council's financial situation now fell on the executive secretary who acted like a watchdog.