Published: 2 June 2017

Moderate cost development for municipalities’ finances on 2016

According to preliminary financial statement data for 2016, municipalities’ combined operating expenses totalled EUR 36.7 billion. The growth in operating expenses amounted to 0.5 per cent compared with the financial statement data for the previous year. The operating revenue amounted to EUR 7.7 billion, which represented a growth of 1.5 per cent from the previous year's level. These data appear from Statistics Finland's statistics on local government finances, for which preliminary financial statement data were collected from Finland’s all 313 municipalities and 144 joint municipal authorities.

Finances of municipalities and municipal groups in 2016, EUR million 1)

  Municipalities Municipal groups
2016 Change, % 2016 Change, %
Operating revenue, total 7 661 1,5 23 951 1,7
Operating expenses, total 36 679 0,5 50 506 1,1
Annual contribution margin 2 718 42,2 5 316 18,9
Net investments 2) 2 441 -2,8 5 650 5,0
Loan stock 31st Dec 16 139 3,7 33 804 3,1
1) Preliminary data
2) Net investments = investment expenses - financing contributions for investment expenses - proceeds from transfers of non-current assets

Finances of municipalities

According to preliminary data, the combined operating margin of municipalities was EUR -28.6 billion in 2016. It weakened from the previous year by EUR 142 million or 0.5 per cent. The slight decrease in the operating margin was affected by to the moderate growth in operating expenses and the increase in operating revenue.

Operating expenses grew by EUR 188 million or 0.5 per cent. The slight growth in operating expenses was particularly caused by the lowering of personnel costs by EUR 202 million. Personnel costs went down in total by 1.4 per cent from the previous year. The operating revenue grew EUR 110 million or 1.5 per cent. The operating revenue increased most due to the growth in fees and charges, and other operating income.

Municipalities' tax funding, which consists of tax revenue and central government transfers to local government, grew by EUR 928 million, or 3.1 per cent. The share of central government transfers in the growth of tax funding was EUR 596 million and that of tax revenues EUR 332 million. The biggest part of the growth in tax revenue was formed by income taxes, which increased the revenue by EUR 367 million. Municipalities' share of corporation taxes decreased, in turn, by EUR 95 million. The growing tax funding covered the weakening of the operating margin and the annual contribution margin improved by EUR 806 million, or 42.2 per cent.

In 2016, the annual contribution margin was negative for 15 municipalities, while in the year before, this was so for 16 municipalities. According to the combined financial statement data, the annual contribution margin covered 127.9 per cent of depreciations. The key figure in question improved from the previous year, when the annual contribution margin covered 91.4 per cent of depreciations.

In 2016, municipalities' net investments were EUR 2.4 billion. The decrease from the previous year amounted to EUR 71 million or 2.8 per cent. Municipalities' combined loan stock grew from the previous year by EUR 580 million, totalling EUR 16.1 billion. The loan stock was 3.7 per cent greater than in the previous year. Calculated per inhabitant, the loans of municipalities were EUR 2,933. 1) Municipalities' equity ratio, or the ratio of equity to total capital, was 59.9 per cent. The ratio went down slightly from the previous year, when it was 60.2 per cent.

Finances of joint municipal authorities

In 2016, joint municipal authorities’ combined operating expenses amounted to EUR 12.5 billion and operating revenue to EUR 13.2 billion. Compared with the previous year, operating expenses went up by EUR 269 million or 2.2 per cent. Operating revenue grew by EUR 190 million, and was in all 1.5 per cent more than in the year before.

The combined annual contribution margin weakened from the previous year by EUR 81 million and totalled EUR 704 million. It was 10.3 per cent lower than one year ago. The annual contribution margin covered 118.5 per cent of depreciations.

Joint municipal authorities’ net investments grew by EUR 91 million compared with the previous year and totalled EUR 823 million. At the end of 2016, joint municipal authorities' loan stock totalled EUR 3.2 billion. During 2016, the loan stock grew in total by EUR 129 million, or by 4.2 per cent.

Finances of municipal groups

In 2016, the operating margin of municipal groups totalled EUR -26.5 billion. It was EUR 2.1 billion stronger than municipalities’ operating margin. The combined annual contribution margin of groups improved from the previous year by EUR 846 million and totalled EUR 5.3 billion. Municipal groups' annual contribution margin was EUR 2.6 billion better than that of municipalities. The annual contribution margin was negative for five municipal groups, while in the previous year, no municipal groups faced such a situation.

The net investments of municipal groups amounted to EUR 5.7 billion, which was EUR 268 million more than in the year before. The combined loan stock increased by EUR 1.0 billion and totalled EUR 33.8 billion. The loan stock of municipal groups was 3.1 per cent greater than in the previous year. The loans of municipal groups per inhabitant were EUR 6,143. 2)

The statistics comprise data on 299 municipal groups. 3)


1) The population data used were the population of Finland on 31 December 2016.
2) The population data used were the population of Finland on 31 December 2016.
3) Group financial statement data are missing from Vesanto of Mainland Finland municipalities. The rest of the missing data concern municipalities of Åland.

Source: Local government finances 2016, preliminary data. Statistics Finland

Inquiries: Karen Asplund 029 551 3611, kuntatalous@stat.fi

Director in charge: Ville Vertanen

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Updated 2.6.2017

Referencing instructions:

Official Statistics of Finland (OSF): Local government finances [e-publication].
ISSN=2343-4163. 2016. Helsinki: Statistics Finland [referred: 23.11.2017].
Access method: http://www.stat.fi/til/kta/2016/kta_2016_2017-06-02_tie_001_en.html

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