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kalenteri 21.04.2014
Economic and Planning Centre >  News > 
 Budget for 2012: Helsinki trusts in future despite uncertain economic situation
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Helsinki trusts in the future despite the uncertain economic situation

The tax revenues rise marginally, 0,6 per cent only. According to expectations, the tax revenues collected by the City will be almost 2,8 billion euro. Financial balance remains the objective, even if the City’s indebtedness grows by 265 million euro.

Helsinki’s tight spending discipline has worked. The City’s operation costs do not grow as fast as a few years ago.

The City’s vitality will be strengthened. New districts Jätkäsaari and Kalasatama are being constructed and different building and renovation projects are in progress in various parts of the city. Important projects are Malmi hospital area and the new health station in Myllypuro, among others.

Mayor Jussi Pajunen

The news briefing on the City of Helsinki 2012 Budget Proposal was held on Friday, 07.10.2011. Mayor Jussi Pajunen presented the proposal.

Year 2012 is the year of major events and themes. Helsinki celebrating its 200 year-jubilee as the capital will organize events and offer experiences. The World Design Capital Helsinki 2012 year uses design to improve cities.

Quality services produced cost-efficiently

The productivity of Helsinki will be increased by reforming the organization, by using space more efficiently and by increasing the use of information technology in services. Major future line solutions are the energy political solutions and the organizational change in the social services and health care sector.

The use of private day-care support will be expanded in children’s day-care. The structural change in the services for the elderly will continue. The number of institutional vacancies will be decreased and sheltered housing will be increased. The strengthening of the care chain in particular is sought by increasing the number of service housing vacancies for people under 65 years of age and for mental health rehabilitees.

The number of students in the City’s Finnish basic education is estimated to decrease slightly. The number of students in the Swedish basic education is estimated to remain on the level of the year 2011. The challenge is to adapt the present school network to changes in the number of students, while the need for facilities in the new residential districts is growing.

Temperate growth in expenditure secures the services in the future

The low tax revenue increase of 2009 and 2010 still affects the economic balance of the City of Helsinki. The per capita service production expenditure grew faster than the overall cost level in the two first years of the council term, that is, in 2009 and 2010. The growth in operations costs was successfully curbed in the years 2010 and 2011. In 2009, the growth was 6,5 per cent and 3,8 per cent last year. According to the latest forecast, the growth in expenditure will be about 3,2 per cent this year.

Mr Tapio Korhonen, Mr Jussi Pajunen and Ms Tuula Saxholm

Director Tapio Korhonen (left) and Budget Director Tuula Saxholm (right) also answered questions of the ladies and gentlemen of the press. Photos: Patrik Lindström.

The growth in the tax revenue is marginal – the municipal tax rate remains unaltered

The estimated tax revenue is almost 2,8 billion euro in 2012. The total growth in tax revenues is 0,6 per cent as per the draft budget. The municipal tax rate will be kept unaltered, i.e. at 18,5 per cent, and the estimated growth in municipal tax is 2,3 per cent. The real estate tax rates will remain on the level of 2011. The municipal share of the corporate tax will be reduced by some four percentage unit to about 28 per cent. Helsinki estimates that the corporate tax revenue decreases by 13 per cent from the expected level of the current year. The government budget proposal gives an estimate of an average 8 per cent decrease in the municipalities’ corporate tax revenue.

The loan portfolio will grow by 265 million euro. By the end of 2014, the loans will amount to almost 2 billion euro, i.e. some 3 200 euro per resident.

Significant uncertainty in the economic outlook

The international debt crisis promises very uncertain outlooks for the basis for the 2012-2014 financial plan. The effect of the future economic development on, for instance, tax revenues is hard to forecast. Both the Ministry of Finance and various economic forecasting institutes have weakened their growth forecasts in the past few months. The worst forecasts suggest that even production will begin to decline.

The City’s target is financial balance securing the services and the prerequisites for growth and development to the residents and the businesses operating in Helsinki without incurring excessive debts. If the availability of loan money decreases, the City has to face a new situation. Indebtedness is a risk to Helsinki, too. The draft budget is based on idea that the necessary repair investments and new construction projects are secured by taking additional loans.

The investments shall be sized on a sustainable basis

In 2012, the City will still make significant investments, amounting to 660 million euro in total. The share of public utilities of the total investments is 248 million euro. As compared to the 2011 budget, the City will invest 24 million euro (3,5 %) less. The investments of the parent city will be 40 million euro (8,9 %) smaller than the 2011 investment appropriations. As compared to the estimated investment outturn of 2011 (including rights of exceeding), the investment appropriations of the parent city are almost five per cent lower. The timing of the investments has been revised and time schedules pushed forward in such projects whose realization is not a prerequisite for major entities, or where it has been possible, however, considering the continuity of operations.

Service facilities in need of renovation or suffering from indoor air problems are important investment projects. The major 2012 investments include, e.g. the renovation of Malmi Hospital and the new health station in Myllypuro. The public transport service level will also improve through investments in stock, access control and depots. Additionally, the Joker transverse line and the traffic arrangements of Itäväylä-Linnanrakentajantie will facilitate people’s everyday and the operation conditions of businesses. The construction of the western metro line will continue as a joint project of Helsinki and Espoo.

House construction projects will be carried out with about 157 million euro in total. The focus is still on renovation whose share is more than 70 per cent of the total.

The City Council approved development programme aiming at carbon neutral future means sizeable investments to Helsinki Energy already during the financial plan term, but especially in the years subsequent to the plan. The implementation of the development programme will be determined by the City Council by the end of the current year. Once implemented, the programme will have a significantly negative effect on Helsinki Energy’s performance in the future years.

The construction of new city districts will be continued according to plan. Some 77 million euro has been reserved for these investments.

Year 2012 – the year of major events

Helsinki has a strong faith in the future, and the city’s vitality will be developed. The City Council will make a decision on the Guggenheim Museum and the Central Library projects in the next coming years. An international architectural contest for the design of the Central Library will be launched next year. The World Capital 2012 Helsinki year will be visible in the cityscape in the form of events and exhibitions and different projects. For instance, Hakasalmi Villa will display an exhibition on work done in Helsinki and those who did entitled Made in Helsinki 1700 – 2012. Helsinki will also celebrate the 200 year-jubilee as the capital city. The theme shows in the curricula of schools, among others. Major sport events taking place in 2012 are the Ice Hockey World Championships and the European Athletics Championships.

The residents’ possibilities to influence will be strengthened through follow-up projects of citizen participation. Regional information and info pool accessible to all free of charge will be expanded in the Helsinki region Infoshare project.


16.11.2011




 Budget Proposal

The budget on the City’s pages (in Finnish and Swedish only)
www.hel.fi/talousarvio

 
   
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