Friday 9/18/20

Finances of Finnish municipalities continued to weaken in 2019

The combined operating margin of municipalities weakened by 1.2 billion euros in 2019 compared with the previous year. However, as a result of growth in central government transfers to local government, tax revenue and financial income, the annual contribution margin weakened less in euros than the operating margin.

Finances of Finnish municipalities continued to weaken in 2019

These data derive from Statistics Finland's statistics on quarterly local government finances, for which financial statement estimate data concerning 2019 were collected from all 295 municipalities and 133 joint municipal authorities in Mainland Finland.

According to the financial statement estimates concerning 2019, the external operating expenses of municipalities in Mainland Finland grew from the previous financial statements by 2.4% to 37.8 billion euros. In turn, operating revenue declined by 4.1% to 7.2 billion euros.

Certain recording procedures used in the comparison year increased the operating revenue and expenses in the comparison year. The discontinuation of these procedures reduced operating revenue and expenses in 2019 compared with the previous year. The operating margin weakened by 1.2 billion euros and was -30.3 billion euros.

More loans and more tax revenue

The municipalities in Mainland Finland received 22.9 billion euros in tax revenue, which represented a growth of 2.6% compared with the previous year. Central government transfers to local government grew by 2.1% to 8.6 billion euros.

Tax funding formed of tax revenue and central government transfers to local government was 5,748 euros per capita, on average. The combined annual contribution margin of municipalities was EUR 1.8 billion, and it decreased by 0.3 billion euros from the year before. In the final statements, a total of 56 municipalities had a negative annual contribution margin, while their number was 44 in the previous year.

Based on municipalities’ own estimates, the loan stock stood at 18.4 billion euros at the end of 2019. This meant a growth of 10.2% compared with the financial statements of the previous year. The loan stock per capita was 3,360 euros. In the financial statement estimates, investment expenses amounted to 3.9 billion euros, which was 7.7% more than the realised investment expenses in the year before.

Joint municipal authorities

The financial statement estimates of joint municipal authorities in Mainland Finland indicate that external operating expenses grew by 7.4% and operating revenue by 6.5% in 2019 in comparison with the final financial statements of the previous year.

The operating expenses of joint municipal authorities were estimated to total 15.8 billion euros and operating revenue 16.4 billion euros. The annual contribution margin fell from 0.6 billion euros to 0.5 billion euros.

According to the financial statement estimates, the loan stock of joint municipal authorities was 17.7% bigger than in the previous year's financial statements, 4.6 billion euros in total. Investment expenses increased by 12.1% to 1.3 billion euros.

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