17.12.201920.12.2019

City budget 2020, financial plan 2021-2022 and economic balancing program

category(ies): Latest news, Economy and strategyTags , ,
winter photo of the city hall

At its meeting held on December 16.12, the Kankaanpää City Council approved the 2020 budget and the financial plan for 2021–2022. At the same time, an economic adjustment program was prepared during the autumn.

The starting point for preparing the 2020 budget was the 2018–2020 financial plan approved by the city council in December 2021, as well as the city council's 2019 budget. The latest tax revenue and government transfer forecasts have been utilized in preparing the budget. It takes into account the income tax and property tax rates decided by the city council on November 18.11.

The starting point for drawing up the budget is a positive result. According to the Local Government Act, the financial plan must be balanced or in surplus. In the 2018 financial statements, the city has a deficit of EUR 0,02 million from previous financial periods on its balance sheet. The 2019 financial statements are expected to have a negative result of EUR 2,9 million. The deficit accumulated in the municipality's balance sheet must be covered within a maximum of four years from the beginning of the year following the approval of the financial statements. The municipality must decide in the financial plan on the specific measures that will cover the deficit during the specified period. An adjustment program has been prepared for this purpose.

Key figures in the budget:

  • The growth in tax revenue is estimated to be +2020%, or EUR 5,7 million, in the 2,2 budget. The magnitude of the growth is due to the fact that in 2019, tax revenue growth will be negative: –1,2%, or EUR -0,48 million.
  • The state contributions have been calculated based on known factors and the Association of Local and Regional Authorities' preliminary calculations for each municipality. The state contributions will increase by +2019% or EUR 7,4 million from 2,0. The increase is mainly due to the end of state contribution cuts. The change in operating margin from the 2019 budget is +0,8% or EUR 0,5 million.
  • The City Council decided on the income tax rate and property tax rates for 18.11.2019 on November 2020, 2020. The tax rates in 21,75 are: income tax rate 21,50% (previous year 1,20%), general property tax rate 1,20% (0,45%), permanent residence 0,45% (1,05%), other residence 1,05% (4,00%), undeveloped construction site 5,50% (3,10%) and power plants 3,10% (XNUMX%).
  • The annual profit is EUR 3,3 million. The accounting profit from the sale of the lighting network has been taken into account as an extraordinary income in the budget. The result for the financial period is EUR + 0,70 million.
  • The net investment amount is EUR 7,7 million. Since the annual gross profit is not sufficient to finance the investments, the loan amount will increase by EUR 3,3 million, after which the loan per inhabitant will be approximately EUR 4.660.

Related materials:

Economic balancing program

The Kankaanpää City Council approved the city's 17.12.2018 budget at its meeting on December 2019, XNUMX, and a sustainable financial program was defined as a task. The process of preparing the sustainable financial program was planned by the city's management team and presented to all city managers at a supervisor information session held in January. After this, the work continued under the leadership of the managers in the city's various units. All city employees were involved in the preparation of the sustainable financial program and ideas are encouraged to be presented openly. The proposals for measures received from within the organization were supplemented with feedback collected from the municipality.

The sustainable financial program was, as scheduled, under consideration by the Kankaanpää City Council at its June meeting. The council then decided to return the financial program for re-preparation and to engage an external consultant in the work. It was also decided to extend the work to the entire city group, meaning that the Basic Services Municipal Corporation PoSa was also subject to the audit.

The City Board selected Perlacon Oy to prepare the balancing program and a steering group for the investigation process, which included the chairmen of the City Board and the council, representatives appointed by the Green and Christian Democrats council groups, a representative of the Kankaanpää For the Benefit of group, and the office-holders, the mayor, the director of administration and human resources, and the director of finance. The steering group had a total of 19 people.

The preparation of the economic balancing program proceeded in such a way that the consultant was provided with detailed initial information on the activities, services, costs, customer numbers and volumes of all different sectors. The work was also supported by the preparation of the previous action program in the spring. In parallel with the city's balancing work, preparatory work was carried out at PoSa, led by the same consultant.

The steering group for the economic balancing program met several times as the work progressed. The city council also held a council seminar on October 30.10, where the need for economic balancing was discussed. In addition, the issue has been discussed extensively at events organized by various party groups. Staff representatives have also discussed the issue at meetings of the cooperation committee.

Perlacon Oy completed a proposal for possible financial balancing measures on 15.11 November, after which the personnel representatives gave their own statement on the proposal. After this, the city steering group presented its final program. The city and PoSa steering groups have also discussed their programs together. After this, the measures have been included in the mayor's 2020 budget and 2021–2022 financial plan proposal, which the city government discussed on 2.12 December. The city council finally decided on the program and related measures at its meeting on 16.12 December.

In summary, the balancing program includes the following:

  • The primary goal of the program is to lift Kankaanpää's economy out of the crisis municipality threat. If no measures were taken, Kankaanpää would be in the crisis municipality procedure in 2022, after having run a deficit for four consecutive years. In euro terms, the goal of the balancing program was to find savings of approximately five million euros.
  • The program consists of various cost-saving and operational efficiency measures throughout the entire city organization. The city's operations will be organized internally in a more efficient manner and the city's prices and tariffs will be reviewed across the board.
  • The balancing program includes measures intended to reduce person-years. The reductions are intended to be implemented by taking advantage of retirements and fixed-term contracts, and the city is not considering dismissals, part-time work or layoffs at this stage. However, the measures under the balancing program may result in changes to work organization, job descriptions and terms of employment.
  • On the city's education side, savings are being sought, for example, by standardizing school start times and by increasing the density of the daycare network in proportion to the decline in the number of children. The steering group did not decide to include the school network reform that was in the consultants' proposal in the program.
  • The largest single increase in revenue is the sale of the street lighting network to Vatajankosken Sähkö Oy. The city enters into a service agreement with Vatajankoski.
  • The balancing program also includes a 0,25 percentage point tax increase, which the city council decided on at its meeting on November 18.11.
  • In addition to the city's investigation, investigation work was also carried out at the basic services municipal joint venture PoSa. In this regard, savings of approximately 3,2 million euros can be found. Kankaanpää's share is approximately 70%.

Related materials:

Additional information:

Mika Hatanpää, Mayor, City of Kankaanpää

044 577 2210, [email protected]

Pekka Laiho, CFO, City of Kankaanpää

044 577 2241, [email protected]