Kerry County Council has called a halt to underwriting grant-aid projects from Government departments to community and other groups. The council was left with substantial debts after guaranteeing loans to State agencies for the Jeanie Johnston replica famine ship tourism project.
The council said it will no longer give guarantees to Government departments or State agencies as this represented an unfair burden on the council. It took the decision after it was forced to underwrite a loan for a community swimming pool recently in which it was not directly involved.
The council is also considering involving other local authorities in a campaign to express dissatisfaction with the practice by departments such as Arts, Sport and Tourism.
In October, councillors were told the promoters of the Ballybunion swimming pool and leisure project would lose €3.8 million in grant aid unless the council agreed to repay the money or take control of the project.
Councillors voted to underwrite the project, but objected strongly to the demand in the deed of covenant. The council has no direct role in the project.
Similar demands have been placed on Killarney Town Council by the department for that town's swimming pool project.
In a written report, Kerry County Council's finance director, John O'Connor, said Government departments asking for guarantees from other State bodies were acting against best practice.
Explicit advice to local authorities from the Department of Finance after the Jeanie Johnston project (where some €13 million of Government money had been spent) was to desist from this kind of "duplication", as one State body underwriting another did not protect the taxpayer.
Liability should stay with the grant provider, Mr O'Connor said. He said he recommended that the council adopt an established policy "to abstain from the granting of further guarantees".
The council has adopted this despite strong warnings from Cllr Paul O'Donoghue, brother of Minister for Arts, Sport and Tourism John O'Donoghue, that the policy was shortsighted.