"The year 2016 in the economy of the City of Helsinki was more positive than expected. The operating margin of the City was better than the budgeted figure and the tax revenue grew more than expected. Thus, the annual contribution margin was €300 million better than the budgeted target”, says Mayor Jussi Pajunen of the City of Helsinki Financial Statements 2016.
Due to the exceptionally high land sales incomes, the City's cash flow financing was enough to cover the investments. In 2016, the cash flow from operations and investments turned out around €160 million positive. This made it possible to reduce the City's loan stock.
The total expenditure of the City fell below the budgeted figure and the comparable expenditure growth remained low, only about 0.5 per cent.
"The restrictive growth target for running costs that has been outlined in the strategy has proved to be a viable method for directing the expenditure growth of the City. It has played a crucial role in balancing the economy of the City." notes Pajunen.
The expenditure was even slightly less than the previous year.
The expenditure growth in social and health care services remained comparatively low, 0.9 per cent. The expenditure growth in education and training services produced by the City was also relatively low at 1.6 per cent.
The future is being prepared
The City operations in 2016 were characterised by the preparation of the City's new leadership system and sector organisation, and by the preparations made for the health care reform and the provincial administration reform. The City Council approved the changes to the leadership system in June 2016 and made the decision to introduce the sector organisation starting 1 June 2017. The new Helsinki City Plan, which the City Council approved in October, enables the growth of Helsinki.
Startup Maria Oy started its operations in August 2016. The aim of the company is to create prerequisites for growth entrepreneurship and support the growth and internationalisation of growth enterprises.
Lively housing development
Just like in the previous year, the housing development was lively in 2016. The number of housing units under construction remained at around 7,000 units. In 2016, there were more residential buildings started than there were housing units completed.
The City's investments without municipally owned companies were €486 million. The investments by municipally owned companies amounted to 177 million, which means that the total investment expenditure was €663 million.
The biggest pre-construction projects were located in Kalasatama, €14 million, in Länsisatama, €22 million, and in Pasila, €9 million.
The City's profit for the financial year was €470 million. The comparable result for 2015 was €18.6 million and the comparable result for 2014 was €188.5 million. 2014 was the last year, when Helsingin Energia was included before the incorporation.
The annual contribution margin was €569 million. The annual contribution margin indicates the income financing left available for investments and loan instalments. The basic assumption is that that the income financing of a municipality is sufficient if the annual contribution margin covers the write-offs. The annual contribution margin covered 169 per cent of the write-offs. The annual contribution margin was €300 million more than what was anticipated in the budget.
The tax revenue amounted to €3,206 million which means that the total tax revenue was €142 million more than the budgeted figure and that the tax revenue accrual was 4.5 per cent higher than a year earlier. The municipal tax revenue was €2,586 million (4.2 per cent growth) with the tax rate at 18.5 per cent. The corporation tax profits were €397 million, which represents an increase of 6.7 per cent. The real estate tax revenue was €222 million; an increase of €7.6 million or 3.5 per cent from the previous year.
The state subsidies allocated to Helsinki were €316 million.
The loans amounted to €2,157 per capita, compared to €2,518 in the previous year. The loan stock at the end of 2016 was €1,371 million. The liquidity of the City at the end of the year was 79 days. Unlike previous years, the liquidity of the City now 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 €210 million.
The equity ratio was 77 per cent. The equity ratio of the City has stayed above 75 per cent during the last few years, when the average goal in the municipal economy is 70 per cent.
The grand total of the balance sheet is €14,249 million. The figure increased by €648 million compared to the previous year.
The Helsinki City Group's annual contribution margin for 2016 amounted to 1,032 million, and improved by some €194 million compared to 2015. The liquidity of the City Group at the end of the year was 59 days.
The City Board processes the financial statements on Monday, 20 March 2017, signs the financial statements and sends them over to the auditors. The City Council approves the financial statements on June 21, 2017.