Helsinki’s budget for 2023 has been prepared while Finland is recovering from a global pandemic and Europe is suffering from instability due to Russia’s ongoing war of aggression in Ukraine. The energy crisis that has arisen with the war is also having a strong impact on the city’s economy.
Finland’s GDP is expected to grow by only around 1.7% this year and, with the impact of the war, is forecast to slow to 0.5% in 2023. Even in this situation, Helsinki aims to ensure responsible and sustainable growth, quality and stability of services.
Political negotiations on the City of Helsinki’s 2030 draft budget have been completed. Negotiations were held between the parties represented on the City Board.
In addition to education and training, additional investment proposed in cultural and leisure services and urban growth
The education and training appropriation will increase by €68 million, or up to 5.1% compared to 2022. The additional appropriation will strengthen the basic financing of education and the implementation of the inclusion objectives, as well as the conditions for ensuring the quality of early childhood education. It also aims to address the challenges of staff availability in early childhood education, particularly in Swedish.
The Culture and Leisure Division appropriation will increase by €8.8 million, representing 4.4% compared to 2022. The extra money will, among other things, increase resources for libraries and culture, strengthen the city’s youth work and improve the maintenance of sports facilities.
An additional €4.3 million will be allocated to the Urban Environment Department, with a focus on ensuring the maintenance and safety of the urban environment and resources for basic operations. In addition, €1 million is being allocated to organising the Kruunuvuori ferry service.
A separate one-off allocation of €5 million to cover energy costs will be added to the City Board’s available means. The appropriation will be allocated to the needs of the divisions in 2023
In addition, an unused reserve of around €7 million in 2022 to cover the extra interest costs of subsidiaries will be reallocated to cover temporary costs arising from the increase in energy costs at beneficiary institutions.
In the Urban Environment Division, Helsinki plans to develop and sell land owned outside the city limits in Vermo, Hannusmetsä and Leppävaara.
Strengthening investment in human resources
A total of €10 million will be allocated in 2023 to strengthen staff benefits and rewards. The draft budget allocates a total of €7 million to the salary development programme in 2023. Under the salary development programme, salary increases will be targeted at occupational groups where the city faces challenges in attracting skilled staff. In addition, the increases will strengthen the wages of the lowest paid groups of workers. A wide range of upgrading needs will be identified.
In addition, €3 million will be allocated to increasing the commuting benefits for all staff, on the basis of a separate study.
The city will ensure that all staff are paid properly by investing €6 million in improving processes and systems.
The implications of the energy situation for the investment plan
A one-off allocation of €6 million for 2023 will be added to the €4.5 million in energy efficiency investments in the city’s investment plan.
According to the city strategy, total investment will be dimensioned to a financially sustainable level in terms of cash flow from operations and investments and growth in the loan portfolio There is uncertainty in the short-term forecasting of investment cash flows, as individual projects may be delayed for reasons beyond the control of the city, and there are always uncertainties in the development of the revenue side. The outcomes for 2021–2022 and the difficulty in forecasting the revenue base and the rate of investment favour a higher level of investment in the budgeting phase. The budget preparation process will examine the realisation of the investment and operating cash flow deficit in 2021 and 2022 and the forecast for 2023, and will ensure that the deficit rule is respected during the council term. The city will invest around €2.5 billion in the 2023–2025 budget years, and €8.5 billion over the 10-year period. In addition to the city’s own investments, Kaupunkiliikenne Oy’s investments in public transport in Helsinki will amount to approximately €580 million in the budget years and approximately €1.1 billion over the 10-year period.
Social-, health- and rescue service divisions to continue under state funding
With the national reform of social-, health- and rescue services, the City of Helsinki’s budget process has been split into two separate parts – municipal Helsinki and the state-funded social-, health and rescue services. In the context of the reform of social-, health and rescue services, the city has retained the responsibility for organising social welfare, health care and rescue services, with full funding coming from the state.
During 2023, as funding becomes better targeted, the conditions for allocating any additional funding to reinforce services will already be assessed during the 2023 budget year.
Investments under the city strategy will continue, for example in low-threshold mental health services, reducing homelessness and improving access to care at health centres. No health centre fees will be introduced in 2023. In addition, a separate division-defined salary development programme will be implemented, financed by state social-, health- and rescue services funding.
City Council to decide on the 2023 budget in November
The full 2023 draft budget will be published on Thursday 27 October. As scheduled, the City Board will discuss the draft budget at its meeting on Monday 31 October, from where it will go to the City Council on 16 November. A decision on the budget is expected to be taken at the council meeting on 23 November.
Photo: Raisa Ranta