Fund for the Equalisation of Local Government Finances

Riga, Dec 9 (LETA) - The association of Riga and Pieriga municipalities, Riga Metropolis, has called on the Cabinet of Ministers to establish equal amounts of contributions to the fund in the draft regulations on the revenues of the Fund for the Equalisation of Local Government Finances

and the procedure for their distribution in 2025, LETA learned from the association.

The representatives of the association stresed that next year Riga together with the municipalities of the Pieriga region will pay contributions to the Fund for the Equalization of Local Government Finances in the amount of EUR 195 million, while the state subsidy is planned at EUR 50 million. The capital and its surrounding municipalities are the only local authorities that contribute to the fund - the other municipalities are the beneficiaries.

Riga Metropolis also calls for the minimum basket of services to be defined as soon as possible and for the financial equalization fund to be allocated only to those municipalities that are unable to provide these services with their own resources. Otherwise, an unequal situation is created, where some of the beneficiaries can afford much more additional services and of better quality than Riga and Pieriga. This is the case, for example, in the area of sports infrastructure.

"Riga has the biggest increase in contributions next year, from EUR 133 million to EUR 138 million, which it will have to pay into the financial equalization fund. While some of the municipalities that will receive subsidies will be able to afford to provide, for example, free lunches for schoolchildren and repair roads, our municipality will be thinking about how to provide basic services," said Riga Vice Mayor and co-chairman of Riga Metropilis, Edvards Ratnieks (National Alliance/LRA).

He also stressed that Riga's infrastructure is used by all municipalities and regions at the same time, so it is particularly important to free up the capital's funds for investment projects.

"If we want to see Riga economically strong and competitive with Vilnius and Tallinn, we need to allow it to develop with its own resources, not take them away. We are ready to support those municipalities which are really facing financial problems due to lack of population, but the rest should be supported by the state in solidarity," said the politician.

Karina Mikelsone (LRA), co-chair of Riga Metropolis and chair of the Adazi municipal council, said that on average, municipalities in the region contribute every fifth euro of their revenues to the financial equalization fund, while the municipality of Marupe contributes even every fourth euro.

"Even if our revenues are higher than those of other municipalities, if we contribute a quarter or a fifth to the financial equalization fund, our capacity to act decreases significantly and even remains critically low for the performance of our basic functions. For example, the population in the Pieriga Region is growing significantly and the need for infrastructure, including pre-schools and schools, roads and communications, is increasing," explained Mikelsone.

At the same time, the region's municipalities have no spare funds at all for development, and have yet to borrow them, when in fact development could be largely covered from their own revenues. "We call on the state to assume joint and several responsibility with the municipalities," said the head of the Adazi regional council.

This year, ten municipalities are contributing to the fund - all Riga Metropolis municipalities, which are Riga and the municipalities of Adazi, Marupe, Kekava, Olaine, Ropazi, Salaspils, Saulkrasti and Sigulda, as well as Jurmala. Other Latvian municipalities are among the beneficiaries. Next year, nine municipalities will be paying - Sigulda has been added to the list of beneficiaries.