City of Tartu's budget and borrowing to increase next year

Tartu Town Hall
Tartu Town Hall Source: Tartu City Council

Due to the current economic situation, the city of Tartu's budget is set to increase by 15 percent next year. It will also be necessary for the city to borrow money to cover its investments.

This year, the main budget of the city of Tartu totaled €212 million. Along with a number of the city's supplementary budgets, this figure increases to around €245 million. However, Tartu deputy mayor Priit Humal said, that next year's budget will be even bigger.

"This is already around 14-15 percent higher than the initial base budget for this year. So, in a nutshell, an increase is definitely necessary. The question now, is how much of it we can cover from operating revenues and how much from borrowing. I am thinking in particular about investments," said Humal.

In comparison to this year, the content of the budget for the coming year is also unusual due in needing to factor in, what were previously unforeseen, areas of additional expenditure. This mostly relates to rising energy costs, a large part of which will be passed on to the city's budget. For example, although the city of Tartu is phasing out gas heating in its buildings, city buses will continue to run on gas next year.

"We currently have a fixed price per kilometer for buses, which is linked to gas market prices. Every time the price of gas goes up, two quarters later, this is reflected in the cost per kilometer of (running) our buses. In this year's budget, that already came to an additional cost of €3 million for us. However, next year the increase will be even higher than that," Humal said.

Despite the increase in costs, the deputy mayor said the city is still heading in the direction of making planned investments. The road network, including the Friendship Bridge (Sõpruse sild) for example, is still waiting to be developed and maintained. However, large amounts of funds are currently being used to repair  absorbed by repairing the infrastructure around schools.

"This is quite a challenge, especially in an environment with such high inflation, because construction is getting more expensive and therefore harder to carry out. If we have to make further delays for the sake of money, (the process) will take much longer than we would like."

It will therefore still be necessary for the city to support its spending with a loan. This mean's the €12 million of borrowing in the base budget for this year, is likely to increase.

"It is a question of volume, or how much we have to do in the coming year. The increase in borrowing next year is likely to be higher than it has been in previous years," Humal admitted.

Tartu's budget for next year must be submitted to the city council by the end of September. The council is scheduled to meet on October 13.


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Editor: Michael Cole

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