– This is going to be very demanding for the municipalities. This is what the chairman of the Municipal Sector’s organization (KS) Gunn Marit Helgesen says about the development in the municipal economy. A joint board of directors in KS expresses strong concern about the situation in Norwegian municipalities and questions whether the understanding of what is now happening has reached the national politicians in the country. On Wednesday they sent a letter of concern to the leadership of the party in the Storting, with the heading “Now it’s serious”. – The financial situation in Municipality-Norway is worsening with each passing day. This is independent of how the municipalities get out of the income system, KS writes in the letter. Read the full letter of concern here Now it’s serious A joint board of KS is very concerned about the situation in Norwegian municipalities and whether the understanding of what is happening now has reached the country’s national politicians. The financial situation in Kommune-Norge is worsening with each passing day. This applies to small and large municipalities and county municipalities, from north to south and east to west. This is independent of how the municipalities exit the income system. The municipalities are the backbone of the Norwegian welfare society. In order for the municipalities and county councils to be able to fulfill their social mission, the Storting must now increase the allocations further than what has been announced and strengthen the local room for action. If not, the country’s national politicians must honestly convey to the citizens what the consequences of the Storting’s budget are. There is too little money to finance what the citizens expect, and the services the municipalities are required to provide by the Storting. The government and the Storting must take this to heart – immediately. What is happening is that there is a gap between what the municipalities and county councils are expected to deliver and what is possible to deliver. The Executive Board is very worried about that gap. This leads to unrealistic expectations and trust is eroded. It can challenge trust in democracy both locally and nationally. The situation is brought to a head by high interest rates, many refugees from Ukraine, rising prices and other factors. But the underlying pressure is not something that goes away until the tasks the municipalities are required to do by law are fully financed and the state management is reduced. We must have an honest dialogue with the citizens. We must have an equal understanding of the situation with the national authorities and the municipalities. Our impression is that this is not the case today. The municipal sector has been streamlining and driving restructuring for many years already. Municipalities and counties will change, and it will also be needed in the years to come. We can only look at the projections in the Outlook report. But restructuring cannot mean cuts, if the sector is to be able to deliver basic welfare services. The problem now is that the sector is under so much pressure that it has to cut back rather than have scope for restructuring and innovation. It is disturbing to see the contrast between the understanding of reality in the parliamentary hall and the country’s municipal and county councils. In the Storting, the majority boast of a historically good municipal system. Out with the local politicians, it is very demanding. If the government and the Storting cannot or will not give more money than they do, then they must do something else to solve the challenges the municipalities are facing. We cannot continue in the same rut. It doesn’t work anymore. We have asked for reduced state management by the government concretely considering the proposal from the Generalist Municipal Committee – it is about staffing standards being unsuitable management tools and reducing law – and regulatory requirements. There is just over a year until the Storting elections. Norway now needs party leaders who, in the long election campaign, have the backbone to occasionally temper expectations. Don’t just make promises. Sincerely, Gunn Marit Helgesen Chairman of the board, on behalf of KS’ executive board To news, Helgesen confirms that there is a serious financial situation in almost all municipalities now. – We had a board meeting on Friday, and there were reports from all over the country about how the situation is – both from large and small municipalities, from north and south, east and west. In addition to expensive time, increased interest and costs, more refugees and more people on social assistance, failing tax revenues are also affecting the municipalities now, she confirms. – It reinforces the already serious situation. Pointer at tax failure Last week, Tromsø municipality presented the financial report for the second term. This comes earlier than expected, and shows that the municipality is moving towards a negative net operating result of 229.5 million. There is a deterioration from earlier this year. Municipal director Stig Tore Johnsen points to failing national taxes as a main explanation for the red figures. And that doesn’t just apply in Tromsø. – The forecasts from the Swedish Tax Agency and KS are historically low tax revenues, both locally and in the municipal sector in general, says Johnsen. Helgesen in KS confirms to news that what is happening in Tromsø may seem to affect large parts of the municipal sector. – It appears that tax revenues for the municipalities will be reduced this year. Exactly how much, I can’t say. Johnsen in Tromsø points out that the assumed tax increase nationally was 4.7 per cent before the summer. Now he seems to be 2.8 percent. Municipal director in Tromsø municipality Stig Tore Johnsen. Photo: Hans L. Andreassen This will lead to a net income shortfall of NOK 125 million, compared with what the municipality has budgeted for. – This is a very large number, which is of course problematic for us to handle when we find out about it now, says Johnsen, and adds: – The same applies to all Norwegian municipalities, and it will have dramatic consequences. – Add stones to the burden Kari-Anne Opsal (Ap) is mayor of Harstad and a board member of KS. Changing the tax rate and increasing tax deductions for people as a result of high loan interest have contributed to the reduced tax income, says Opsal. – This is something we have to take up centrally, because the municipalities cannot manage everything on their own. We expect some answers from the government, she says, and adds: – I say that as the mayor of Harstad, but this is a picture you see in the whole country. Kari-Anne Opsal, mayor of Harstad. Photo: Harstad municipality In her municipality, the financial report is not ready yet, but Opsal has nevertheless received indications that the same applies in her municipality. Harstad Tidende writes that failing tax revenues alone will constitute a deterioration of at least NOK 20 million for Harstad. – This adds another stone to the burden for the municipalities in the terribly difficult year 2024, says Opsal to news. – What do you expect from the national politicians now? – I expect them to understand that this is not wolf-wolf-crying. Now it’s really serious. We are forced to close schools. We are forced to cut positions. We are forced to cut services for elderly people who need it. We are unable to develop services for the demented in the way we should. Now it’s serious. We will not be able to pay if we do not get a slightly better economy. – Demanding and serious The shortfall in tax revenue comes at the same time as many municipalities are already reporting a large increase in consumption. According to KS, 96 per cent of the municipalities report increased consumption in the nursing and care area. Three out of four municipalities report that they expect more consumption overall this year. Gunn Marit Helgesen, chairman of KS. Photo: Kristina Kalinina / news In recent years, tax increases have saved several municipalities’ finances, says Helgesen. But now the tax revenues also appear to be lower than expected. – This can be demanding and serious for the municipalities, says the KS top. She does not want to speculate on what is the reason for the dramatic change in tax income for the municipalities. In the letter of concern to the party leaders, KS writes that the situation is seen at the extreme with high interest rates, many refugees from Ukraine, price increases and other factors. – There is too little money to finance what the residents expect, and the services the municipalities are required to provide by the Storting. The government and the Storting must take this into account – immediately. KS believes that the underlying pressure will not go away until the politicians fully finance the tasks the municipalities are required to do by law and reduce the state governance. – It is disturbing to see the contrast between the understanding of reality in the parliament and the municipal and county councils in the country. In the Storting, the majority boast of a historically good municipal system. Out with the local politicians, it is very demanding, writes KS. – We cannot continue on the same track. It doesn’t work anymore. 2.5 billion in emergency aid – The government takes the economic situation very seriously. This is the reason why this year we already announced a boost for the municipal economy in the 2025 budget, and it is important for the municipalities that are now hit by the high prices. This is what Minister of Local Government and Modernization Erling Sande (Sp) answers when he presents the criticism in the letter from KS. – When the Storting considered the municipal bill in June, the government agreed to the municipal framework for 2025 and the restructuring of the income system. I therefore take the view that there is full understanding in the Storting for the demanding financial situation the municipalities are in. news also interviewed Sande before KS sent the letter to the politicians. Then Sande said that 2024 looks set to be a demanding year for Norwegian municipalities. – Now the municipalities are being hit by the same thing that people’s private finances have been hit by recently, namely increased costs and interest, says Sande, and adds: – Then we have to stand together to ensure the welfare offer around the municipalities. Sande points to the fact that the government has announced that an extra NOK 2.5 billion will come to the municipalities next year, as a result of the demanding financial situation. Local Government and Modernization Minister Erling Sande (Sp). Photo: Rolf Petter Olaisen / news – What is the reason that the municipalities are in this situation now? – It has been difficult for the municipalities to calculate the tax revenue. We are now making changes to the revenue system, which will make tax revenue for the municipalities more predictable. Sande will not say anything more about how this will happen before the national budget is presented at the beginning of October. – But the measure we have already announced is also to lift the municipalities that have the lowest incomes now. Published 25/09/2024, at 12.57 Updated 25/09/2024, at 13.40
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– Critical economy for many municipalities – news Troms and Finnmark
