Mayor of Estonia's second city Urmas Klaas (Reform) said: "Preparing the draft budget for the coming year was stressful. We have to cope with large price increases and look for savings opportunities, while at the same time find means to implement important investments and raise the salaries of teachers and the city's social and cultural workers."

"The projected increase in income tax collection will mostly cover salary hikes, while loans will be needed for investments,' Mayor Klaas continued, via a city government press release.

Priit Humal (Isamaa), Deputy Mayor for Finance, said: "When it came to planning next year's investments, both Tartu and all other local governments had to make a crucial decision: whether to continue implementing the planned investments with higher prices and loan interest, or to make cuts and maintain a low debt burden,' adding that the city continues to invest in education and the urban space, despite rising prices and costs.

The planned investment budget of €56 million is €9 million higher than 2022's figure and includes construction and reconstruction work on schools and kindergartens, a major road extension (Põhja pst) and the development of the Emajõgi River promenade, among over 120 objects earmarked.

Tartu plans to borrow €41 million to facilitate these investments, while the city's net debt burden will rise to 64 percent (below the 80 percent cap).

Tartu 2023 budget quick facts:

• Operating income: €211 million (up 9 percent on year).
• Personal income tax, the most important source of revenue, hiked by €12 million as a result of wage rises.
• The tax revenue forecast: €126 million.
• State and other grants: €60 million.
• A further €24 million to be derived from the sale of goods and services.
• €209 million is planned to cover the costs of Tartu's core activities, with costs increasing by €21 million, or 11 percent, compared to this year.
• Labor costs: €110 million - more than half of the costs of the city's core activities and a rise of €15 million on year.
• School and kindergarten salaries to rise 24 percent; teachers' assistants' by 16 percent.
• Culture workers' salaries up 18 percent, social workers up 20 percent.
• €26 million in subsidies, with larger grants going to private kindergartens and childcare providers, social assistance grants, culture, sports and hobby education.

The city government has sent the draft budget bill to the council chambers.

A similar process is ongoing in Tallinn and in all municipalities in Estonia, as well as at the state level, with the aim of the 2023 budget passing its vote by year-end.

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