City Council approved budget 2018

The Helsinki City Council approved budget and the economic plan for 2018–2020 in its meeting of 29 November.

City Council lowered municipal income tax rate to 18.0% and determined 2018 real estate tax rates. Helsinki also abolishes dox tax.

Press releaseOctober 10: Mayor Jan Vapaavuori on the Helsinki 2018 budget proposal: Strong emphasis on investments and appropriations for education. Tax reduction as a counterbalance to the rising costs of living

Economic growth combined with the City's tradition of responsible management of finances enable new commitments in both investments and the operational economy. These are especially visible in the Education Division, in accordance with what has been outlined in the City Strategy.

The good overall situation in the Helsinki economy allows for the compensation of the rising costs of living with a moderate reduction of the income tax by 0.5 percentage points. In the future, Helsinki would have a municipal income tax rate of 18 %.

The financing of the investments and the commitments in the operational economy that have been outlined in the strategy can be covered with cash flow financing even after the tax relief without significant further incurring of debts.

The City economy has strengthened

The economic situation of the City looks more stable than in the previous years, which is due to the economic recovery of the entire country and the growth of the companies located in Helsinki.

The total tax revenue for 2017 is estimated at EUR 222 million more than what was anticipated in the 2017 budget. Especially the strong growth of the corporation tax revenue elevates the tax revenue forecast. According to the latest forecast, the operating and investment cash flow for 2017 show a surplus of around EUR 60 million, and this enables a repayment of the loan stock accordingly. The City's liquidity remains at a good level in 2017. The basis set by the current year for the planning of the budget for the upcoming year is thus positive.

Considering the population growth and the productivity goal set in the City Strategy, the operational economy expenditure, which is in agreement with the strategy review, may grow by 1.35 per cent in the upcoming year, compared to the 2017 budget.

The City Strategy, The Most Functional City in the World, directs the preparation of the budget: the implementation of the strategy starts from the Education Division

The preparation of the budget proposal is strongly affected by the new City strategy, which was recently approved by the City Council. In the Strategy, the essential foundations for the economic planning are the annual 0.5 per cent productivity goal and that the City's indebtedness per capita must not rise.

"In the City Strategy, the increased financial leeway can be seen especially as a decrease in the annual productivity goal from 1 per cent to 0.5 per cent. The investment roof was also abolished in the preparation of the strategy. In addition to the increased appropriations, the financial leeway is now visible in the proposal in the form of a reduction of the municipal tax rate to 18 per cent”, says MayorJan Vapaavuori.

In accordance with the City Strategy, the needs of the growing City and the change in the level of costs has been acknowledged in the projection of the operating expenses, targeted especially for basic public services, where the population growth increases the expenses most directly. This is especially shown as an approximate EUR 40 million addition in the appropriations to the Education Division, where the measures outlined in the Strategy can be initiated immediately.

The Education Division will, among other things, start to increase the number of places in early childhood education and in comprehensive school in English and strengthen the Chinese language teaching and other immersion course and language-enriched teaching. Also to be started is the preparation of a development plan for education for immigrants.

The implementation of the City Strategy is visible in other divisions as well. The Culture and Leisure Division has prepared for the expenses related to opening of the Helsinki Central Library Oodi. In the Social Services and Health Care Division, the growing groups of clients who need more demanding care is taken into account and the Ohjaamo activities are made permanent. In the Urban Environment Division, the entries owing to the Strategy are visible especially in the investments. The starting point for the repair construction is ensuring the safety, healthiness and usefulness of the premises, especially the schools and day-care centres. A little over a quarter of the investment expenditure is used to curb the maintenance backlog, including compensatory new construction.

The investment level of the growing City reaches new high

The population of Helsinki is expected to grow by 7,720 residents annually between 2017 and 2020.

The investment level of the growing City reaches an all-time high in the budget proposal for 2018. The City's investment expenditure is EUR 774.0 million in total, of which the investments by municipal enterprises amount to 181.8 million. The City's combined investment expenditure grows by EUR 111.1 million (16.8 %) compared to the 2017 budget. Excluding the financial contributions by other parties (gross amount of the investments shown in the City budget) in certain investment projects (Helsinki Central Library and Dance House Helsinki), the investment expenditure of Helsinki grows by EUR 91.6 million (14.3 %).

The prerequisites for the growth of the City are secured by commitments to the investments required by the housing production goal and business life, as well as to the development of the service network. Investments in public transport are made to ensure the implementation of previously approved projects.

"A growing City must keep developing and that requires sensible and well-aimed investments. The vision of the most functional City in the World, as defined in the City Strategy, is essentially put into practice through investments in solutions that improve the housing, the traffic and the liveability of the city”, concludes Mayor Vapaavuori.

Tax rate reduced by 0.5 percentage points

The 2018 budget proposal includes a reduction of the municipal tax rate by 0.5 percentage points to 18 per cent. The Mayor's proposal also sees the dog tax abolished.

According to Mayor Vapaavuori, the tax relief is especially meant to compensate the negative effects that the soaring costs of living have on the purchasing power of the residents of Helsinki.

"The urbanisation remains rapid and currently there are no signs of a situation where the costs of living would become considerably lower in Helsinki. Moreover, in its own budget, the Government proposes increases to the real estate tax, which in part affects the rising costs of living and increases the total taxation ”,Vapaavuori explains.

According to the Mayor, the reduction of the tax rate is possible without compromising the investment capacity or the City's economic standing. To the contrary, the investment level is higher than ever and in the preparation of the budget, it has been possible to meet the operating cost needs of the divisions almost in full. According to the Mayor, it is natural that when the tax rate is increased in difficult times, it can also be moderately reduced when the economic situation is more stable.

Reducing the tax rate by 0.5 percentage points means an approximate EUR 70 million drop in the municipal tax revenue and the amount of municipal tax paid by the citizens. Taking the reduction of the tax rate into account, the cash flow financing is enough to cover both the strategic goals for the operational economy and the financing of the investments without significant further incurring of debts.

The estimated municipal tax revenue in 2018 EUR 2.53 billion (2017 budget: 2.46), the estimated corporation tax revenue EUR 540 million (2017 budget: 390) and the estimated real estate tax revenue EUR 285 million (2017 budget: 248).

In 2018, the estimated central government transfers to local government are EUR 175 million, when the estimated accrual for 2017 is EUR 220 million.
Helsinki budget2018
If you notice an error, highlight the text you want and press Ctrl + Enter to report it to the editor
3 views in january
I recommend
No recommendations yet


Post your comment to communicate and discuss this article.

The coach of a sports club in Hyvinkää, southern Finland has been remanded into police custody on suspicion of sexual abuse of minors he was coaching, the Itä-Uusimaa police department said on Thursday. Officials said that they are investigating the case as suspected child abuse but did not disclose the ages of the alleged victims. The suspect in the case, a 50-year-old man, was remanded into custody on Wednesday. The suspected sexual abuse is believed to...
Finns increasingly forego do-it-yourself construction of prefab elements in favour of completely completed homes. Turnkey homes (where homes are fully finished and owners can immediately occupy them) have become more popular than traditional house packages, says the Finnish Association for Manufacturers of Prefabricated Houses. “About 7,500 detached homes are built in Finland every year, and about 70 percent of them are prefabricated houses of some kind,”...
THE FESTIVE ATMOSPHERE in the Helsinki neighbourhood of Arabianranta was visibly subdued on Tuesday, as residents mourned the death of a local child who is believed to have been murdered. While little information has been released to the public, it is known that the victim was murdered near their home on the night of Christmas Eve (December 24). The police apprehended a suspect at the scene of the crime, who has been confirmed as a 36-year old male. Whethe...
One of Finland’s most famous seafaring vessels, the titanic icebreaker Otso, was deployed on its first mission of the winter season last night, keeping sea routes open for the 22nd year in a row. Late in the evening of Christmas Day, Otso, the crowning glory of Arctia Oy’s extensive fleet, departed from Helsinki’s Katajanokka Harbour, heading north to the Bay of Bothnia. The 7000-ton Polar icebreaker has been tasked with keeping waterways open between Oulu...
Eight Finnish political parties have published their a statement on future climate policy goals in Finland. Prime Minister Juha Sipilä (Centre) in November invited all nine parliamentary parties to join a task force established to find an agreement on new, more ambitious climate goals for Finland. The one-month project was led by Kimmo Tiilikainen (Centre), the Minister of the Environment, Energy and Housing. The Finns Party abandoned the task force last w...
A 25-year-old man suspected of the sexual abuse of a girl under the age of 15 in Oulu, northwestern Finland, who was arrested in Germany last Tuesday is now reported to be at large. According to law enforcement officials in Oulu, the suspect was released by German police before he could be transferred to Finnish custody due to "a breakdown in communication between authorities". Oulu District Court ordered the suspect to be reprimanded into custody in absen...
Finland’s high earners saw their real income grow more in 2017 than their peers in middle and low income groups, according to new data released by Statistics Finland on Tuesday. Incomes among the country’s highest income decile rose by 4.4 percent in 2017 compared to 2016, while the year-on-year increase was 1.3 percent for middle income earners. Incomes for the four lowest income deciles meanwhile grew by 1.2 percent over the one-year period. However amon...
A man wanted in connection with a suspected arson attempt on a home in Helsinki’s Käpylä district was remanded into police custody on Sunday. The Helsinki district court has remanded a man suspected of attempted arson and attempted murder into police custody, ending a short-lived manhunt, police said on Sunday. The 25 year-old is suspected of using a Molotov cocktail to cause a fire at a flat in Käpylä, Helsinki last Monday. The apartment was completely de...
Helsinki Central Library Oodi will opened its doors to the public on 5 December at 8am, a day before Finland’s 101st birthday. Designed by ALA Architects, this library of a new era is an ode to Finnish culture, equality and freedom of expression. Oodi offers everyone an open, public urban space at Kansalaistori Square, right opposite Parliament House. Central Library Oodi is an active and functional meeting point with 2.5 million expected annual visitors....