Businesses all over Galway gave a sigh of relief on Monday night as city councillors agreed to a one per cent increase in commercial rates. In a show of solidarity to business experiencing tough economic times, councillors angrily rejected a proposed 3.8 per cent hike in rates. The new rate decision formed part of a tough budget from Galway City Council, which saw cuts of three per cent in payroll expenditure as well as huge reductions in money available for conferencing and advertising.

In order to facilitate the lower commercial rates, the Housing department took a hit of €200,000 in funding while the Roads Department had their budget reduced by €300,000. City officials were also commended for forgoing bonuses in the interests of balancing the books.

Despite the city's water troubles, rates are to increase from 99c per cubic metre to €1.60, bringing an extra €210,000 in revenue to the council's coffers.

Labour councillor Billy Cameron, who led negotiations on this year's budget, said he was "very pleased" with the outcome and that it showed a "caring council".

"Personally I am delighted with how the budget meeting went. I can honestly tell you that the councillors were going for a zero per cent increase in commercial rates but the city manager strongly objected. However, I would like to recognise the leadership shown by city officials in not accepting their bonuses as this, combined with the €70,000 set aside for homeless services shows we are a caring council and are getting prepared for the tough times ahead."

"There was great co-operation between all the councillors on Monday night, which shows that people are taking their jobs seriously and working together for the betterment of the city," he said.

Responding to the rate increase, Galway Chamber President Paul Shelly said the council had shown as "responsible approach".

"We lobbied for a zero increase but realised that this probably wouldn’t come to pass due to the Government decrease in the Local Government Fund to Galway City Council this year. The decision of the councillors to set the increase at one per cent is welcome and shows a responsible attitude to the difficulties facing business in Galway at this time," said Mr Shelly.

"We had put it to the councillors that their options were very clear. Take a short-term ‘balance the books’ approach and risk driving business and jobs away or take a longer term strategic approach and ensure that Galway remains a place where businesses want to come to, where job opportunities remain plentiful and where business people feel their spirit of enterprise is rewarded."

Galway Chamber was, however, critical of Government who this year reduced funding from the Local Government Fund to Galway by 6.9 per cent or €674,000.

"This decrease in the Local Government Fund allocation to Galway meant that councillors had to increase the commercial rates. If Government had acted responsibly and not cut the allocation, then Galway City Councillors may have been able to cut the rates. It is now time for Central Government to step up to the plate and sort out the allocations from the Local Government Fund so that business can be helped weather the current storm," said Michael Coyle, CEO of Galway Chamber.

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