The year 2018 was positive in the economy of Helsinki. The operating margin was €81 million better than in the budget. The City’s external operating expenses grew by 2.8 per cent compared to the previous year. The growth was moderate compared to the expenditure growth in other large cities or the entire municipality field. Helsinki’s investment level was high, as was the case in 2017 and 2016.
The population of Helsinki was approximately 649 800 at the end of 2018. The population increased by 6,500 inhabitants. The increase was proportionally smaller than in the previous year, but still quite remarkable.
- Last year, the City invested €625 million in the needs of the growing City. Helsinki must make sure that the City grows sustainably. This calls for investments in services, traffic solutions and housing, notes Mayor Jan Vapaavuori.
Record-breaking year in housing development
At the end of 2018, there were 10,032 housing units under development, which is considerably more than in the previous years. The housing development goal of 6,000 housing units was exceeded. The construction of 7,943 housing units started as a consequence of strong urbanisation and a good situation in terms of plots, detailed plans and constructability. There were 4,843 housing units finished and 7,109 building permits issued.
City’s result of the financial period still good
The City’s result of the financial period was €386.8 million, which is €199 million better than in the budget. The 2017 result was €483.1 million, while the 2016 result was €470.2 million. The 2018 result became possible as the operating margin was better than in the budget (€81 million) and the tax revenue and the income from central government transfers to local government increased more than what was anticipated in the budget (€106 million). The debt interest payments were also less than in the budget (€12 million).
The City’s external operating expenses grew by 2.8 per cent compared to the previous year. The growth was moderate compared to the expenditure growth in other large cities or the entire municipality field. The expenditure of the City Strategy’s economic goal that concerns the scaling of the operational expenditure grew by approximately 2.0 per cent in 2018.
The annual contribution margin was €752 million. The annual contribution margin indicates the income financing left available for investments and loan instalments. The annual contribution margin was €206 million higher than anticipated in the budget. This was especially due to the tax revenue being better than anticipated.
Cash flows from operating and investing activities came out at €150.7 million positive. This key figure that describes the situation in the City economy was weaker than in the previous year (€245 million in 2017). The reason for the level being lower than in the previous year was the lower level of the annual contribution margin.
Slight growth in tax revenue
The accrued tax revenue was €3,416.6 million, which means that the total tax revenue was €35.8 million higher than in the previous year. The accrued tax revenue including corporation tax revenue and real estate tax revenue was 1.1 per cent more than in the previous year.
As of the beginning of 2018, the local income tax percentage was lowered by half a percentage point in Helsinki. Helsinki's tax revenue development was above the national average, even though Helsinki lowered its local income tax percentage. Helsinki’s earned income tax base has grown better than the national average during the last few years.
The accounts of income from central government transfers were €197.3 million, which was almost €23 million less than in the previous year. This was mainly a result of the cuts related to the Competitiveness Pact and the growth in the tax revenue base-related balancing of the income from central government transfers.
Loans of €1,693 per capita
The City's loans amounted to €1,693 per capita, compared to €1,871 in 2017. The loan stock at the end of the year was €1,100 million. The liquidity of the City at the end of the year was 91 days. The liquidity of the City also includes group subsidies' account funds deposited in the City's group account. The City's loan stock (loans from financial institutions and insurance institutions) decreased by €106 million.
The Helsinki City Group's annual contribution margin for 2018 amounted to €1,358 million, a decrease of about €35 million compared to 2017. The City of Helsinki's annual contribution margin decreased by €86 million compared to the previous year. Thus, the elevating effect of the local authority subsidiaries on the annual contribution margin of the City Group was more than €50 million better than in the previous year. Especially Helen Ltd's operations were more profitable than in the previous year. The combined investment level of the local authority subsidiaries was €1,093.5 million and it was €328.9 million above the previous year’s level (€764.6 million).
The City Council processes the financial statements in June.
The City Board processes the Financial Statements on Monday 18 March. The Financial Statements will proceed to the City Council in June.
Summary of the 2018 Financial Statements (in Finnish)