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Tallinn's budget to exceed €1 billion for first time in history

Tallinn skyline in the morning.
Tallinn skyline in the morning. Source: Siim Lõvi /ERR

On Thursday, Tallinn city government approved the city's budget for 2022, which will exceed the €1 billion mark for the first time ever. The investment volume will almost double to €269 million.

"The total budget volume is greater than €1 billion for the first time in history at a total of €1,032 million, which is up €76.3 million from the ongoing year's budget," Mayor of Tallinn Mihhail Kõlvart (Center) said.

"Despite it being a significant increase, especially in terms of investments, which double from last year, we will continue our conservative policy in financial activities and choices. We will go forward with the aim of our revenue growing faster than our expenses and the end of the coming year must be positive, which will allows us to maintain crucial reserves," the mayor added.

The planned total revenue of the city is €868.4 million, of which 64 percent is made up of individual income tax, 20 percent is earmarked subsidies and 10.4 percent will come from the sale of goods and services.

Operating expenses total €746.6 million, of which 69 percent will be covered with revenue from the city treasury.

Kõlvart said the city will continue its conservative line in relation to loan burdens. As Tallinn did not borrow any money this year, the city government plans on borrowing €90 million next year. "But we will also remain in the planned budget with that loan, meaning volumes will not increase," he said, adding that the loan burden will be around 32-33 percent.

The mayor said the city will think long-term and understands that there are major investments upcoming for the city, such as the Tallinn Hospital development and Linnahall. "Therefore, we want to have a city reserve as well as a loan reserve so that we can use it to develop larger projects," Kõlvart said.

The city's main source of income is income tax, the increase of which will allow the city to increase its expenses. Kõlvart said this stems from wage growth and that intensive wage growth in the entire country has also created pressure in the city's systems. "We have allocated €10.3 million next year to increase wages," the mayor said.

"Wage increases are planned for every sector, but we are not basing them off a general percentage. Wages will increase according to the market's conditions so that our wages would be competitive with those of other sectors. There is also the danger of people leaving for the private sector," Kõlvart said.

Investments are another priority for the city, growing 93 percent year-on-year, totaling €269 million in 2022. "Investments are meant to improve and develop the city's infrastructure. We have a conceptual direction, the green transition, but our approach is not ideological, but is based on the understanding that our changes must improve quality of life, whether that be environmentally friendly public transportation, the cycle strategy, street lights, establishing circular economy centers - it is all related to the green transition plan, but also with realizing everyday needs," the mayor said, adding that €60 million of the investment resources will go toward green projects.

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Editor: Kristjan Kallaste

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