Sums allocated for local governments will be used to alleviate crisis damages and liven up the economy.
Of the €130 million to be made available to local governments, €30 million will go toward mitigating the direct negative effects of the crisis, €70 million toward new investments and €30 million will be used for local roads maintenance.
Local governments' extraordinary expenses and investments benefit will mainly be distributed based on population. Every local government will also be paid a base sum, with additional support meant for island municipalities.
Revenue base stabilization support totaling €30 million will help compensate for falling own revenue and new expenses in the crisis situation. Local governments are seeing reduced revenue from parking, kindergarten fees, hobby school fees, interest payments. The crisis situation also requires new expenses, such as social benefits and the need to procure disinfectant and personal protective equipment, the Ministry of Finance communicates.
To help cover these costs, €29 million of the extraordinary expenses support measure will be distributed between all local governments, with an additional €1 million made available to island municipalities. Every local government unit will get €80,000 as a base sum (€40,000 for local governments with fewer than 4,000 residents), with the rest of support distributed proportionally to population. Additional measures will be allocated to island municipalities where tougher restrictions on movement are in effect.
Investment support for local governments in the supplementary state budget is aimed at alleviating the negative effects of the economic crisis. €67 million will be distributed between all local governments and €3 million made available to island municipalities that must observe tougher emergency situation rules.
Every local government will get €200,000 in base investment support if it has over 4,000 residents. Smaller local governments will take in €100,000 in base investment support. The rest of the investment instrument will be distributed proportionally to population.
Additional support of €3 million for island municipalities will see base sums of €40,000 per local government with the rest distributed between all island municipalities in proportion to population.
Local governments are allowed to use support for new investments, renovation, demolition and other associated expenses. Necessary contracts need to be signed inside this year, while work is allowed to continue into next year.
The additional €30 million for local roads maintenance will be distributed based on the same principles as the €29 million allocated in the regular state budget. Therefore, state support for road maintenance will be a little more than doubled for every local government, the ministry said.
Minister of State Administration Jaak Aab (Center) consulted with the Associations of Estonian Cities and Rural Municipalities before taking the proposals to the government.
"Finance ministry experts have discussed support with representatives of the association on several occasions. Our recent virtual meeting took place on Tuesday," Aab said.
Editor: Marcus Turovski