The Kirkkokallio industrial area will bring a significant boost to the vitality of Kankaanpää with the municipal merger. Photo: Martti Tikka / Westphoto Photo Agency
The Kankaanpää City Council reviewed the 2021 budget and the 2022–2023 financial plan during its budget hearing held on Monday 23rd-Tue 24.11th November and approved it with a few additions based on the proposal submitted by the Mayor.
– The past financial year has been surprising, says the chairman of the city council Katri Kujanpää. – Due to the corona, the city's financial situation initially seemed very bad, but the state has come to the aid of the cities quite generously. In the case of Kankaanpää, the economy is also helped by the municipal association grant received from the state. However, it is not appropriate to lull ourselves into excessive satisfaction, because after the years of support, things are returning to normal, which means that the implementation of the adjustment program drawn up last year is still necessary.
The City Council will discuss the budget at its meeting on December 14.12.
The main objective of budget preparation is to cover deficits
The merger of Honkajoki Municipality with the City of Kankaanpää, which will take place at the beginning of 2021, has brought additional work to budget preparation. Coordinating and re-budgetizing operations in one organization from two cultures requires adaptation.
The budget preparation process starts with an institution-specific net framework, which is based on the previous financial statements and the current year's budget. Therefore, for the 2021 budget, the income statements of the current Honkajoki and Kankaanpää for the previous years, 2019 and 2020, were combined. When calculating the framework, the upcoming organizational change has also been taken into account, which does not substantially change the division of labor between the institutions, but increases volumes.
In the 2019 financial statements, Kankaanpää and Honkajoki have a joint deficit of 5.7 million euros. The financial statements of both municipalities for 2020 are expected to be slightly negative. The deficit in the balance sheet must be covered during the four years following the year of approval of the first deficit financial statement. In the case of Kankaanpää, this means the years 2020-2023.
– Overall, however, the budget process has proceeded quite smoothly, says the mayor. Mika Hatanpää. – We have a strong common goal of covering the economic deficits within the given deadline. With these prospects, it is possible, but it still requires strict financial management. So we cannot be too happy about the surplus results, they are now necessary.
Corona subsidies from the state and municipal association support will ease the economy
Tax revenues and government transfers included in the budget are always based on factors known at the time of preparation and preliminary calculations by the Ministry of Finance. The current year has shown how much information from the government can change. The beginning of the year looked very bleak in terms of tax revenues, but additional funding through government transfers will compensate for the loss of tax revenues.
In 2020, increased government transfers will amount to EUR 3,1 million, and in 2021, government transfers will increase by another EUR 2020 million, or + 3,1%, from the 9,2 budget. In total, government transfers are expected to amount to EUR 2021 million in 38,3.
2021%, or EUR 40 million, of the municipal merger grant has also been recorded as income in the 1,4 central government transfers. The grant will also be received in the following two years, 30% at a time.
The 2021 budget is based on the same tax rates as in 2020. The Joint Council made a decision on the percentages at its meeting on November 16.11 and decided to keep them at the current figures for Kankaanpää, i.e. the income tax rate is 21,75% and the property tax rates are as follows: general 1,20, permanent residential buildings 0,45%, other residential buildings 1,05%, power plants 3,10% and undeveloped construction sites 4,00%.
The 2021 budget estimates that tax revenue will be 48,3 million euros. The growth in tax revenue from the previous year is + 3,9%, or 1,8 million euros.
The operating margin for 2021 has been calculated at EUR 80,8 million. The change in operating margin from the 2020 budget is + 2,4%, or EUR 2,4 million. The annual margin is EUR 6,6 million. The budget includes the accounting profit from the sale of the lighting network of EUR 1,7 million as extraordinary income.
The result for the financial period is + EUR 4,0 million. Excluding the one-time capital gain and the 40% share of the merger contribution, the result for the financial period would be + EUR 0,9 million.
Investments remain high, more will be invested in marketing
The share of investments in the city budget is 8,4 million euros. Since the annual surplus is not sufficient to finance investments, the loan amount will increase by 1,8 million euros, after which the loan per inhabitant will be approximately 4.850 euros (in 2019 4.704 euros/inhabitant).
The most important projects continue to be the large-scale renovation and development project of the sports center and the renovation project of the basic service center Tapala. – These projects are very important welfare projects for the city, reminds the mayor. – In the Tapala project, we were able to celebrate the opening of the new part in the fall of 2020 and the project continues, among other things, with the renovation of the emergency rooms. After a gap year due to state funding, the sports center will be able to complete the renovation of the ball hall next year.
The amalgamation board also decided to increase the budget for marketing and communications. – The coronavirus situation has, as research shows, caused Finns to move from large cities to rural municipalities. We must seize this opportunity and continue to raise the city's profile so that our region can also benefit from this movement. Housing campaigns have already started this year, says Kujanpää, chairman of the city board. – Another key area of development is marketing related to locating companies and finding work. With the amalgamation of municipalities, our business base will be significantly strengthened and we must invest in highlighting these opportunities.
Additional information
Katri Kujanpää, Chairwoman of the City Council
044 710 5312, [email protected]
Mika Hatanpää, Mayor, City of Kankaanpää
044 577 2210, [email protected]