In 2023, operational expenses increased by slightly under 6% compared to the organisationally comparable level of the 2022 budget. Structural changes implemented by the City in the future will bring about more leeway. ‘Municipal Helsinki’ refers to the City of Helsinki without the Social Services, Health Care and Rescue Services Division’s expenses, which will be funded with universal state funding as of the beginning of next year.
The annual contribution margin and the financial results of Municipal Helsinki will decrease in 2024–2025 from the level of the 2023 budget. This is caused by a drastic increase in operational expenses and a change in the municipalities’ tax funding model brought about by the national social services, health care and rescue services reform. In 2023, municipalities will continue to receive some tax income based on their tax rates of 2022, due to which the annual contribution margin will be realised in 2023 at a higher level than in the following years. As investment efforts will simultaneously be at a record-high level in 2023–2025, the internal financing percentage of the City’s investments will decrease towards the end of the financial plan period. The internal financing percentage of investments indicates how large a portion of the City’s annual net investments can be funded with internal financing.
The social services, health care and rescue services reform determines Helsinki’s municipal tax rate. Municipalities will not be able to determine their own municipal tax rate for 2023, as it will consist of their 2022 municipal tax rate cut in accordance with a legally prescribed percentage point change, i.e. by 12.64 percentage points. In 2023, Helsinki’s municipal tax rate will be 5.36%. The purpose of this regulation is to prevent tax rate increases caused by the state having to increase tax rates in order to transfer municipalities’ duties to wellbeing services counties and under state funding.
Helsinki’s loan portfolio increases
According to Helsinki’s financial plan, the City’s loan portfolio is expected to be at 150% of the level of the end of 2021 by the end of 2025. As the City’s loan portfolio at the end of 2021 was €913 million (€1,386/resident), it is expected to be €996 million (€1,489/resident) at the end of 2023 and €1,184 million (€1,752/resident) at the end of 2024.
According to the financial plan, the City’s loan portfolio is expected to increase by a total of €449 million by the end of 2025.
Investment expenses to increase slightly
In the 2023 draft budget, the City’s investment expenses will increase slightly from 2022. The investment level forecast for 2022 is €876 million, while the level of investments of the 2023 draft budget is €893 million.
In the 2023–2032 period, the main focus of new building construction projects will be on the construction of service buildings and replacement buildings in new areas. For all premises, and schools and daycare centres in particular, the starting point in renovation construction projects will be to ensure the usability, healthiness and safety of the buildings.
As regards major traffic projects, the rail traffic projects that were up and running during the financial plan period will continue: the first phase of the Crown Bridges tramway project, the tramway from Kalasatama to Pasila and, in connection to it, the construction of the northern opening of the Sörnäistentunneli tunnel.
The City Board will review the draft budget at its meeting on Monday 31 October, from where it will be forwarded to the City Council on 16 November. The Council is expected to make its decision on the budget at its meeting on 23 November.