Changes are proposed to municipalities’ state contributions – the effects on individual municipalities are big

Municipalities who investigated the reform of the state share system Arto Sulonen and Eero Laesterä presenting in his report several changes to the system. They would have major effects on the amount of state contributions of individual municipalities.

State contributions ensure that municipalities have enough money to fulfill their statutory duties.

The biggest effects would be caused, among other things, by the fact that items that equalize the municipal effects of the social security reform are proposed to be deleted. It is also suggested that the state share paid based on population density be deleted and the share paid based on bilingualism be changed.

The surveyors consider that it would nevertheless be necessary to equalize the effects of these. The compensation would be large and permanent in many municipalities.

One controversial issue has been whether the revenues from wind and solar power plants should be equalized among the municipalities. At the moment, the property tax revenues obtained from them are not taken into account in the equalization, although nuclear power plants are taken into account. The report suggests that in the future, property tax would be taken into account for all types of power plants, i.e. also for wind and solar power plants, with the same share.

Surveyors also believe that the reprogramming of municipalities’ tasks and funding should start as soon as possible. This is especially justified by the fact that the social security reform has completely changed the situation.

“This whole thing inevitably involves a rethinking of the municipal structure – or at least whether all municipalities are doing the same things, at least as a minimum, according to the laws,” the report states.

The surveyors point out that the biggest problems are municipalities that are small and often declining in population, where services are only available in the core center and they only meet the minimum set by law. By increasing their tax rate, these municipalities cannot collect enough new revenue to bring the services to the level of growth municipalities.

“This “devilish” set of problems cannot be fixed with the current municipal funding, not with this range of services – and not necessarily with the current municipal structure,” the report states.

State contribution system renewal has been recorded Petteri Orpon (kok) to the government’s program. Minister of Municipalities and Regions Anna-Kaisa Ikonen (kok) announced in October that the reform will be postponed by a year. Originally, it was supposed to come into effect in 2026, now the goal is in 2027.

Ikonen later justified the postponement to STT with the complexity of the matter and the desire to carry out the reform carefully. He also admitted that handling the matter before next spring’s municipal elections would not have been easy.

The surveyors state in their report that no stance has been taken on the model at the political level. The report is said to contain plenty of elements on which both political decision-makers and municipal officials disagree.