Tallinn and Tartu city councils endorse budgets for 2021
On Thursday, Tallinn city council approved the city's budget strategy for the period 2021-2024 with a budget of €861.5 million for 2021. The city council of Tartu also approved their budget for 2021 - €215 million.
The chairman of the council, Tiit Terik, said that the aim of the budget was to make sure that all residents of the city cope well regardless of their age and all services are ensured. As one such measure, the support for the elderly, meaning the pension supplement paid by the city, will rise from the current €100 to €125 from next year.
"The main source of income for the city is the personal income tax, which has declined a bit, however. To alleviate the impact of the crisis, reserves accumulated earlier will be tapped into, whereas borrowings will be used partially to finance investments," Terik said.
Investments are budgeted to total €165.6 million, which is 17 percent more than this year. The actual need for the loan planned to cover the investments depends on the inflow of the city's revenues during the next year, the balance of the city's liquid assets as well as the implementation of the planned investments.
The city's revenue will decrease by a total of 1 percent -- personal income tax revenue, subsidies received, as well as land tax and dividend income will decrease. The main reason for the lower receipts of the city's main source of income, income tax, is the decrease in the number of income earners in 2020 due to the crisis.
The budget strategy points out that the further wellbeing of the economy in this crisis is determined primarily by getting the COVID-19 virus under control. According to the baseline scenario of the Ministry of Finance, Estonia's GDP will decrease by 5.5 percent in 2020 and grow by 4.5 percent in 2021, being at the end of 2021 about one percent smaller than the level seen at the end of 2019.
In operating expenditure, the fields with the biggest shares in the strategy period are education, maintenance of roads and streets, public transport, social services and city maintenance. Greater attention will be paid to environmental sustainability, meaning circular economy and the green turnaround, projects of the smart city and realization of the bicycle strategy.
Investment activity will continue in the years covered by the strategy in all fields of activity of the city and investments are planned to total from €136 million to €164 million a year, with developing the city's educational establishments, public transport and the green zone, as well as the construction and reconstruction of roads and streets continuing to occupy an important place.
The largest share of the operating costs of the city, a total of €277.3 million, accounting for 41.1 percent of the costs, will go to the field of education. Totaling €48.4 million, investments in the field of education make up 29.2 percent of the city's total investments next year. In 2021, three schools and four kindergartens will be renovated, two schools will be expanded, and Nomme Gymnasium will get a sports building.
Investments in the field of culture make up €16.8 million of the budget, and the largest projects are the development of the Tallinn City Theater, Tallinn Zoo and the Botanical Garden. The volume of investments in the field of sports will increase to a total of €5.6 million, the largest of which are the complete renovation of Tallinn Sports Hall and the renovation of Kadriorg Stadium.
A significant part of the city's budget expenditures will go to the urban transport sector, accounting for 14.1 percent of the city's expenditures, while €86 million has been planned in next year's budget for regular services expenses and the volume of urban transport investments will increase to €3.7 million. With this, 100 new gas powered buses will be purchased next year and the use of school buses will be expanded.
The maintenance, construction and reconstruction of roads and streets and street lighting also continue to be important. A total of €35.8 million has been earmarked for this purpose in next year's budget. In the field of roads and streets, the largest increase in the volume of investments is also by 30 percent, a total of €53.8 million is planned for the overhaul and reconstruction of roads and streets.
In the new year, Tallinn will invest €17.1 million in upkeep, of which more than €10 million has been planned for the tidying up, reconstruction and establishment of a total of 15 parks and green areas. A total of €6 million is planned for the construction of the planned Tondiraba park on nearly 33 hectares. Playgrounds and park elements will be built, expanded and reconstructed for a total of €2.6 million.
In the field of social welfare, existing support measures will be continued with, as well as both temporary and permanent support measures will be extended to those in need. Thus, it is planned to increase the support for the elderly, that is the city's pension supplement, to €125 from next year, and a total of €11.4 million will be spent on this support from the city budget each year.
Expenditures in the field of social welfare will increase by 9 percent next year compared to this year, reaching a total of €57.8 million. The city will make investments in the field of social welfare for €9.2 million, including the start of construction of the nursing home of the Iru care home.
For the first time, the city budget also includes funds for the draft participatory budget in the total amount of €800,000 . Idea-gathering for the participatory budget took place until the beginning of December and 420 proposals in total were filed. A public vote on the proposals will be held from Jan. 18-31 next year.
Tartu's budget for 2021 to be €215 million
On Thursday, the council of Tartu also approved their budget for 2021. The budget for the next year in Estonia's second biggest city will be €215 million.
According to spokespeople for the city council, the budget focuses on improving the living environment, education, Tartu as a green city, and placing value in culture and sports. The biggest amounts of investments will go to road construction, social services and education.
Income from core activity, which includes taxes, sale of goods and services, subsidies and income from other operations, are budgeted to total €170 million next year, which is 2.4 percent more than the revised budget for the current year.
The main revenue items of the city are personal income tax, of which €91.1 million is estimated to flow in, subsidies with €55.6 million, sale of goods and services by institutions of the city with €19 million, land tax with €1.94 million and local taxes with €1.4 million.
Expenses of core activity will amount to €160.2 million, of which €90.5 million or 56 percent will be expenses on education.
Income from investment activity is budgeted to reach some €17 million and expenditures on investment activity €35.6 million.
The city is set to invest €15.6 million in the field of the economy. The maintenance and construction of streets are roads will occupy an important place in investment activity, getting altogether €13.3 million in investments.
The biggest projects in that field are the construction of a viaduct and tunnels of Riia street, reconstruction of Puiestee street, construction of paths for non-motorized traffic along the route Vaksali-University of Life Sciences-Waldorf School, and of the first stage of the Tartu-Rahinge-Ilmatsalu path for non-motorized traffic.
A total of €2.3 million has been earmarked for the maintenance and construction of street lighting.
Investments in the field of education are budgeted to total €6.3 million, or 18 percent of total investments. The main investments of the field of education are the renovation of the Meelespea and Ristikhein kindergartens, preparations for extending the Karlova school and construction of Kroonuaia School on Ploomi Street.
Investments in the field of culture, sports and leisure activities are budgeted to total €2.9 million and investments in the field of social services €5.3 million.
The most important investment in the field of culture is the Annemoisa football hall and the biggest projects in the field of social welfare, the construction of social housing on Tuve street and of a care home on Nolvaku street.
The city government's reserve under the budget for 2021 will increase to almost €1.3 million to help cover the costs related to the prevention and containment of coronavirus.
The city is set to borrow €5.5 million to finance new investments and €19.1 million to refinance existing obligations. The size of the city's net debt burden is estimated to be 54 percent at year-end, way below the current ceiling of 80 percent that has been temporarily raised to enable municipalities to mitigate the impacts of the coronavirus crisis.
The size of the budget of Tartu for 2020 was €208 million when the budget was first endorsed. In June, the council cut the budget by €3 million.
The budget for 2021 was passed in the council by a vote of 41 to three.
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Editor: Kristjan Kallaste