Helsinki's budget for 2023 has been prepared amidst post-pandemic recovery in Finland and instability in Europe due to Russia's ongoing war of aggression in Ukraine. The energy crisis that has arisen as a result of the war is also having a strong impact on the city's economy.
Finland's GDP is expected to grow by only around 1.7 per cent this year and, with the impact of the war, is forecast to slow to 0.5 per cent in 2023. Even in this situation, Helsinki aims to ensure both responsible and sustainable growth and quality and stable services.
Budget negotiations on the City of Helsinki’s 2030 draft budget have now reached their conclusion. Each of the political parties represented on the City Board took part in the negotiations.
Extra funding also allocated for culture and leisure services, urban growth
The 2023 budget allocation for Helsinki's Education Division will increase by EUR 68 million, or up to 5.1 per cent compared to 2022. This supplementary funding will strengthen the basic financing of education, implementation of the city's inclusion objectives, and the conditions for safeguarding the quality of early childhood education. It also aims to address the challenges of staff availability in early childhood education, particularly in Swedish-language facilities.
The Culture and Leisure Division allocation will increase by EUR 8.8 million, representing a 4.4 per cent increase on 2022. The extra funding will increase resources for libraries and culture, strengthen the city's youth work and improve the maintenance of sports facilities.
An additional EUR 4.3 million will be allocated to the Urban Environment Division, with a focus on ensuring the maintenance and safety of the urban environment and resources for basic operations. In addition, EUR 1 million is being allocated to the organisation of a Kruunuvuori ferry service in southeast Helsinki.
A separate one-off allocation of EUR 5 million to cover energy costs will be added to the City Board's operating margin. This money will be targeted as necessary to the divisions' needs in 2023.
In addition, an unused reserve of around EUR 7 million from the 2022 budget that was meant to cover extraordinary subsidiary expenditures owing to the coronavirus will be reallocated to cover temporary costs arising from the increase in energy costs at the beneficiary institutions.
Another development associated with the city's Urban Environment Division is Helsinki's plan to develop and put up for purchase land it owns outside the city limits, in the districts of Vermo, Hannusmetsä and Leppävaara.
Strengthening investment in human resources
A total of EUR 10 million will be allocated in 2023 to fortify the city's system of staff benefits and rewards. The draft budget proposes an allocation of a total of EUR 7 million to the salary development programme in 2023. Under the salary development programme, salary increases will be targeted at occupational groups where the city faces challenges in attracting skilled staff. The increases are also designed to strengthen the wages of the lowest paid groups of workers. Pay raise needs will be comprehensively mapped out in the coming year.
In addition, EUR 3 million will be allocated towards increasing staff commuting benefits, on the basis of a separate study.
The city will ensure that all staff are paid properly by investing EUR 6 million in improving payroll processes and systems.
Implications of the energy situation on the investment plan
In 2023, a one-off allocation of EUR 6 million will be added to the existing EUR 4.5 million in energy efficiency investments in the city's investment plan.
According to the Helsinki City Strategy, the city's total investment is set at a level consistent with a sustainable level of total expenditure, consisting of operating expenses plus investment, as well as growth in the loan portfolio. There is uncertainty in the short-term forecasting of investment cash flows, as individual projects may be delayed for reasons beyond the control of the city, and there are always uncertainties in the development of the revenue side. The outcomes for 2021–2022 and the difficulty in forecasting the revenue base and the rate of investment favour a higher level of investment in the budgeting phase. The budget preparation process examines the realisation of the investment and operating cash flow deficit in 2021 and 2022 and the forecast for 2023, and will ensure that the deficit rule is respected during the council term. The city will invest around EUR 2.5 billion in the 2023–2025 budget years, and EUR 8.5 billion over the 10-year period. In addition to the city's own investments, Kaupunkiliikenne Oy's investments in public transport in Helsinki will amount to approximately EUR 580 million in the budget years and approximately EUR 1.1 billion over the 10-year period.
Health, social and rescue services to continue under state funding
As a result of the national health and social services reform, the City of Helsinki’s budget process has now been split into two separate parts – Helsinki's municipal services and state-funded health, social and rescue services. The health and social services reform determined that the City of Helsinki will retain administrative responsibility for organising its social services, healthcare and rescue services, but with full funding coming from the state.
As the year 2023 progresses and the new funding becomes clearer, the prerequisites for the allocation of supplementary funding to strengthen services will be assessed accordingly.
Investments laid out in the City Strategy such as low-threshold mental health services, homelessness reduction and better access to care at health stations will continue as planned. No health centre fees will be introduced in 2023. In addition, a separate division-defined salary development programme will be implemented, financed by the health, social and rescue services' state funding.
City Council to decide on the 2023 budget in November
The full 2023 draft budget will be published on Thursday 27 October. The City Board will discuss the draft budget at its meeting on Monday 31 October, from where it will proceed to the City Council on 16 November. A decision on the budget is expected to be taken at the 23 November City Council meeting.
Article updated at on 17 October 2022 to clarify a few names and concepts.