Municipalities’ expenses decrease by EUR 827m in 2017

The operating expenses of municipalities made a downturn in 2017, according to Statistics Fin-land.

Municipalities’ combined operating expenses totalled EUR 35.9 billion and they decreased by 2.3 per cent compared with the actual financial statement data for the previous year.

Total operating revenue amounted to EUR 7.2 billion, which represented a decline of 6.1 per cent from the previous year's level.

These data appear from the preliminary financial statement data of the statistics on local govern-ment finances, for which data were collected from all 311 municipalities and 141 joint municipal authorities in Finland.

According to the data, the local government operating margin amounted to EUR -28.3 billion. It strengthened by EUR 318 million or 1.1 per cent compared with the actual financial statement data of the previous year.

The operating margin strengthened because operating expenses decreased more than operating revenue examined in euros.

Operating expenses declined by a total of EUR827 million or 2.3 per cent.

The drop in operating expenses was affected most by a EUR 968 million decrease in personnel costs. Personnel costs went down in total by 6.7 per cent from the previous year.

Operating revenue, in turn, declined by EUR470 million or 6.1 per cent. The drop in operating revenue was caused by a decrease in sales revenue, as well as in subsidy and grant income.

According to preliminary data, municipalities’ tax revenues grew by EUR 446 million or 2.0 per cent from the year before.

The share of income taxes in the tax revenue growth was EUR 33 million. Municipalities' share of corporation taxes increased by EUR343 million. By contrast, central government transfers to local government decreased by EUR 289 million or 3.3 per cent.

Tax funding formed of tax revenue and central government transfers to local government grew by EUR 157 million or 0.5 per cent. Calculated per capita, municipalities received a total of EUR 5,639 in tax funding. The growth in tax funding and the strengthened operating margin boosted the annual contribution margin to a growth of EUR 568 million in 2017.

In 2017, municipalities' net investments were EUR 2.4 billion. The decrease from the previous year amounted to EUR 54 million or 2.2 per cent. Municipalities' loan stock grew from the previous year by EUR 31 million, totalling EUR 16.2 billion.

The loan stock was 0.2 per cent higher than in the year before. Loans per capita in municipalities amounted to EUR 2,933. 2) Municipalities' equity ratio, which describes the ratio of equity to total capital, was 60.8 per cent. The ratio went up from the previous year, when it was 59.9 per cent.

According to preliminary financial statement data, joint municipal authorities’ combined operating expenses amounted to EUR 13.6 billion and operating revenue to EUR 14.4 billion in 2017. Compared with the actual financial statement data of the previous year, operating expenses went up by EUR 1.2 billion or 9.2 per cent. Operating revenue grew by EUR 1.1 billion or 8.4 per cent year-on-year.

The annual contribution margin of joint municipal authorities weakened from the previous year by EUR 31 million and totalled EUR 674 million. It was 4.3 per cent lower compared with the previous year. The annual contribution margin covered 110.6 per cent of joint municipal authorities’ depreciations.

Net investments grew by EUR 236 million and amounted to EUR 1.1 billion. During 2017, the loan stock of joint municipal authorities grew to EUR 3.5 billion, which corresponded with a 9.1 per cent overall growth compared with the financial statement data of 2016.