Merikarvian municipality is implementing a unique experiment in which local residents participate in budget planning. Sitra is funding the development of this new operating model, which expands local democracy. The RatkaisuTori local resident panels opened on 5.9 September with a discussion on the values related to the municipal budget. The work at the Municipal Office continued on 11.9 September by presenting financial data to support decision-making from two completely different perspectives.
At the second municipal panel event, we got to know Merikarvian the municipality's financial situation in light of actual economic figures. Peter Tattersall from Hahmota Oy presented visualizations of the municipality's cash flows, income and expenses. Artificial intelligence-assisted analysis revealed completely new possibilities for studying financial data from an impact and efficiency perspective through indicators. There is a lot of material and it will be distributed to the panelists after the event for further study. From this link You can find a visualization of financial data designed by Hahmota Oy.
Mayor Kimmo Puolitaival presented the modeling done by Hahmota alongside analyses prepared in a more traditional style by the consulting firm DeloittePuolitaival stated that the national trend of decreasing population growth is also true. MerikarviaHe reminded Merikarvia"It is still a municipality that benefits from migration. The population is also aging here and the number of people under 18 is decreasing, but there are no significant changes in the number of working-age people," Puolitaival summed up.
The 2022 financial statements were in deficit – 413,000 euros, the mayor said. Operating expenses increased as tax revenue fell and government transfers decreased. The annual margin was close to zero as the treasury shrank. Puolitaival brought up an interesting detail; there has been a turnaround in the municipality’s finances – tax revenue is now greater than government transfers for the first time in a long time. Puolitaival noted that social and health care costs Merikarviawere high: 5,200 euros/inhabitant last year. The corresponding Finnish average figure was 3,700 euros/inhabitant. The costs of specialized medical care are also difficult to predict. New, effective, albeit expensive forms of treatment and individual illnesses are quite clearly visible in the financial figures for a municipality of this size, and the differences between years can be significant, comments Juhani Kotiranta, chairman of the council.
However, it was noted that the future looks quite bright, and social and health expenses have also been transferred to the welfare areas. The municipality is not significantly indebted and there is no need to worry about interest rate risks. If tax revenue does not drop, the result could be better than expected this year, Puolitaival praised. The corrections to the calculations of state shares were also pleasing. Cost moderation must still be maintained: personnel costs must not get out of hand, the mayor commented. And there is no room for severance payments in investments either – interest rates are rising. However, there is no need to fear being subject to an assessment procedure, a crisis municipality scenario is quite unlikely, Puolitaival stated.
The audience asked about the decline in corporate tax revenues, and panelist Jenni Nurmi asked about the reasons for them. The answer can be found in the corona years, Puolitaival explained. The contribution rate was increased by the state at the time and then reduced, this is indeed reflected in the statistics. The tax revenue generated by companies is important for municipalities, and annual changes in profit-making are also reflected in the municipality's financial figures, he continued. MetsäFibre is a good example, Puolitaival pointed out.
The impact assessments of the investments were also asked about and it was found that making them was quite challenging. And on the other hand – the municipal infrastructure must be in good condition – you pay what you pay, Puolitaival stated. Water must flow and waste management must function. It is important to make investments that support vitality and reduce energy consumption, Puolitaival highlighted.
The discussion continued promisingly after the official event. The data material seen today will be distributed to participants for closer examination, and the economic discussion will continue in the form of working group work on September 21.9.2023, XNUMX.
Key economic concepts were reviewed to make it easier for the municipal panel to familiarize themselves with the information they received.
Financial statements An annual description of the municipality's finances for the most recent financial year prepared by the municipality.
Income statement The part of a municipality's financial statements that presents the municipality's income and expenses during one financial period.
Tases The part of a municipality's financial statements that presents the municipality's assets and liabilities at the end of the financial period.
Budget A municipal financial management plan approved by the municipal council for the budget year before the end of the previous year.
Operating cost Expenses arising from municipal operations, such as personnel costs and purchases of services.
Operating income Income generated from municipal operations, such as sales proceeds or subsidies.
Investment expenditure A long-term acquisition, i.e. not just an operating expense for one financial year.
Surplus/deficit for the financial period The municipality's net profit/loss during the financial period.
Accumulated surplus/deficit Accumulation of financial year results in previous years. at 7,1 MEUR
Further information: Sari Hatanpää – sari.hatanpaa@merikarvia.fi tel. 044 7246 301
Article updated on September 14.9.2023, 11.26 at XNUMX:XNUMX: Link added to the text to Hahmota Oy's financial data visualization
Article updated on September 14.9.2023, 11.26 at XNUMX:XNUMX: Added link to financial data analysis created by consulting company Deloitte.