The municipal director in Bodø municipality, Kjell Hugvik, is clear in his speech: – This is dramatic. On Tuesday afternoon, they presented the year’s second quarterly report. With just over two months left in the year, it seems that Nordland’s largest city will spend over a quarter of a billion kroner too much in 2024. To be completely precise; NOK 325 million too much in one year. – We will not be able to make up the extra spending this year, as there will not be enough funds to cover it. This will lead to a backlog that will affect budgets going forward, says Hugvik. The new town hall was completed in 2019. It cost a fortune. Now the municipality is broke. Photo: Sofie Retterstøl Olaisen / news Buy, buy, buy It should not come as a bolt from the blue for the residents of Bodø municipality that the economy is in bad shape. In March, it became clear that the municipality is working to close both kindergartens and schools in order to turn the economy around. Mayor Odd Emil Ingebrigtsen said the following at the time: – We have fallen into the luxury trap. In times of good incomes and low interest rates, people succumbed to the temptation to take out large and constantly new loans. Bodø’s new competition pool cost around NOK 390 million. Photo: Bodø Spektrum KF There has been no lack of willingness to invest in Bodø in recent years: In addition, two new schools have been built in the last ten years, one school has been completely renovated and the town has got a new library and cultural center. To name a few. – Simply explained, Bodø municipality continues to spend more money than we have, and we have done this over several years, and in addition the savings have been used up. This is happening despite the fact that the employees are working hard to cut costs, says municipal director Kjell Hugvik. A sleek new road leading up to a hotel outside the center of Bodø is one of the investments the city has made. Photo: Ola Helness Points to three main reasons The report itself will be presented to the city council on 31 October. It will probably be grim reading for the politicians, and the municipal director points to three factors which are mainly behind it: Increased additional consumption on operations. Failure of tax revenue. Increased financial expenses (interest and repayments). – Like many other municipalities, Bodø municipality has been hit by a perfect economic storm. Both income and expenditure are failing and with the high interest costs, the municipality has become a debt slave, says Hugvik. Kjell Hugvik has to present a nasty report at the end of October. Photo: Eilif Aslaksen / news It appears that the municipality will spend NOK 242 million too much on services for Bodø’s population this year. Three areas stand out: Education and culture – NOK 53 million too much. Health and care – NOK 90 million too much. The municipality’s joint expenses – NOK 90 million too much. – In short, Bodø municipality has too expensive services. For example, we still see that there are major challenges with the use of temporary workers and the costs of equipment and medicines in health and care. There are many children in child care who need help, says Hugvik. “Yngrebølge” The director points out that the costs associated with the services they have to provide are increasing far more than what the state contributes. – The growth in these services has led to a so-called “younger wave” which is now more demanding for the municipalities than the older wave. When there are fewer children in Bodø over time, the state gives less money to this group. So far, we have not managed to shift enough money from services for children and young people to health and care. As a result, we are unable to achieve balance in the economy. The director of the municipality believes that the economy is challenged through conditions that the municipality does not control; national failure in tax revenues and state underfunding of municipal services. – Of the reported excess consumption on ordinary operations, tax failure and additional costs on finance account for more than half of the amount, says Hugvik. Among other things, the municipality had a budget with NOK 73 million more in tax revenue than they are likely to end up with. Dismissing people So; What is the municipality doing to turn the tide? Bodø municipality has initiated an extensive restructuring process which, among other things, involves downsizing. They had plans to reduce spending by NOK 300 million. So far, they have managed to “save” NOK 131.6 million. Hugvik emphasizes that the full effect of dismissing people will not be felt properly until next year. Of other savings measures, they look at the use of land, where they spend much more on both rented and owned land than other municipalities they should compare themselves with. Kjell Hugvik has warned against the development for several years. So have other bosses before him. Photo: Per-Inge Johnsen / Per-Inge Johnsen According to the director, there have been no warnings. Both he and others in the same chair as him have warned year after year. – But the situation is even more serious this time, compared to previous years. Published 08.10.2024, at 17.02 Updated 08.10.2024, at 17.04
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Managing against a deficit of NOK 325 million – news Nordland
