Finances of municipalities continue to weaken in 2019

The combined operating margin of municipalities weakened by EUR 1.2 billion in 2019 compared with the financial statements of the previous year, according to the financial statement estimates received from municipalities in Mainland Finland.

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, according to Statistics Finland.

These data appear 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 per cent to EUR 37.8 billion. In turn, operating revenue declined by 4.1 per cent to EUR 7.2 billion.

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. 1) The operating margin weakened by EUR 1.2 billion and was EUR -30.3 billion.

The municipalities in Mainland Finland received EUR 22.9 billion in tax revenue, which represented a growth of 2.6 per cent compared with the previous year. Central government transfers to local government grew by 2.1 per cent to EUR 8.6 billion. Tax funding formed of tax revenue and central government transfers to local government was EUR 5,748 per capita, on average. 2) The combined annual contribution margin of municipalities was EUR 1.8 billion, and it decreased by EUR 0.3 billion from the year before. 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 EUR 18.4 billion at the end of 2019. This meant a growth of 10.2 per cent compared with the financial statements of the previous year. The loan stock per capita was EUR 3,360. 3) In the financial statement estimates, investment expenses amounted to EUR 3.9 billion, which was 7.7 per cent more than the realised investment expenses in the year before.

The financial statement estimates of joint municipal authorities in Mainland Finland indicate that external operating expenses grew by 7.4 per cent and operating revenue by 6.5 per cent in 2019 in comparison with the final financial statements of the previous year. The operating expenses of joint municipal authorities were estimated to total EUR 15.8 billion and operating revenue EUR 16.4 billion. The annual contribution margin fell from EUR 0.6 billion to EUR 0.5 billion.

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