21 mayors dissatisfied with govt’s compensation plan

The mayors of the 21 largest cities in the country are dissatisfied with the cabinet’s current compensation plan for the coronavirus-hit economies of the municipalities saying the insufficiency and ambiguity of the proposal have made the cities concerned.

The five-party alliance government on Wednesday made a decision in principle to grant the country’s municipalities approximately one billion euros in compensation to cover the expenses related to the COVID-19 pandemic.

According to the latest estimates, however, this would only cover about half of the costs Finnish municipalities will incur, said the City of Helsinki in a press release.

According to the release, the financial state of many municipalities in Finland had already been in a challenging situation before the coronavirus outbreak started, and if the state compensation proves insufficient to cover the resulting costs, it is clear that cities throughout the country will have to seriously consider cutbacks and tax increases to achieve and maintain a balanced budget.

In addition, the release pointed out that the 500-million-euro first phase of state compensation to make up for lost tax revenue will be deducted from the state assistance for the year 2021, so it will not change the prevailing situation or relieve the financial distress of Finland’s municipalities in the long term.

It is essential that the state compensates for the additional expenses and lost revenue in a just manner, said the release, adding that support should also be targeted at those municipalities and cities where the outbreak has had the largest effect and caused the greatest loss of tax revenue.

The effects of the proposed compensation plan on individual municipalities cannot be assessed currently, as the government will not decide on support measures and targeting methods until later in the spring. For this reason, municipalities cannot rely on the plan resulting from the government’s supplementary budget negotiations in their own decision-making.

The wide range of effects the coronavirus crisis will have on municipalities and the public sector as a whole must be analysed in close dialogue between the cities and the state. “Only once we are able to reach a common understanding of the necessary course of action will we be able to find our way out of this crisis,” states the press release.

This statement was issued by the C21 network of mayors, municipal leaders who represent the cities of Helsinki, Espoo, Tampere, Vantaa, Oulu, Turku, Jyväskylä, Lahti, Kuopio, Kouvola, Pori, Joensuu, Lappeenranta, Hämeenlinna, Vaasa, Rovaniemi, Seinäjoki, Mikkeli, Kotka, Salo, and Porvoo.

The network members meet regularly to strengthen communications in the area of municipal policy and jointly promote the best interests of the country’s largest cities.