TALLINN, Sep 24, BNS - The board of the Association of Estonian Cities and Municipalities has decided to sign the minutes of the negotiations between the association and the government committee on the state budget strategy for 2025-2028 and the 2025 state budget, as the government left the revenue base of municipalities mostly intact amid spending cuts elsewhere.

In the past two years, the association has not signed the minutes of the negotiations.

Urmas Klaas, mayor of Tartu and vice chairman of the board of the Association of Estonian Cities and Municipalities, said that the result of the negotiations is that the revenue base of local governments will not be reduced.

"We were able to conclude this year's state budget negotiations on a positive note, meaning that the government's cutback plans largely bypass the revenue base of local governments. However, this does not mean that previous reductions in the revenue base, the government's current cuts, tax increases, and the difficult economic situation do not affect us. Local governments are also tightening their belts seriously in terms of both operating costs and investments," Klaas said.

As a result of the negotiations, discussions with the government on the principles of the funding of local governments will continue.

"The wish of local governments is that several grants provided to municipalities and cities, such as the road maintenance subsidy, should go directly to the revenue base. Transferring specific sectoral grants to the revenue base ensures the growth of the financial resources received in line with the increase in income tax receipts,” said Klaas, noting that it is positive that the government committee is open to this idea. 

Klaas said that, unfortunately, due to the poor state of public finances, no funds could be found to support the proposal of the association to provide support to local authorities to create crisis and prevention specialist positions.

"Increasing crisis preparedness is an important priority at both national and local level. Consequently, the association proposed that the state should support the hiring of such specialists by municipalities in order to increase crisis preparedness. The government committee supported the proposal in principle, but there is no money for it," Klaas said.

One of the areas likely to face cuts, according to the vice chairman of the board of the Association of Estonian Cities and Municipalities, is hobby education, as it has become clear that government subsides for it are slated for a cut.

Jan Trei, deputy director of the Association of Estonian Cities and Municipalities, noted that at the start of the negotiations, there was a lot of uncertainty as many potential cuts for municipalities were on the table.

"Today, we have the assurance that the government does not plan to cut municipal revenues, which provides some confidence in the planning of activities in this difficult time," he said.

Representatives of the government and the Association of Estonian Cities and Municipalities hold annual negotiations on the state budget strategy for the next four years and the following year's state budget.

Tallinn newsroom, +372 610 8832, sise@bns.ee

Baltic News Service