This autumn, several municipalities will have to make drastic cuts in school provision and care for the elderly. Sky-high debt and increased interest expenses are partly to blame. On the other side of the table sits the state with an enormous oil fortune and large financial revenues. Also from the municipalities’ debt. The loan party continues More than half of the municipalities’ debts are loans from the Kommunalbanken. The state-owned bank recently moved into newly renovated premises at Filipstad Brygge – close to Tjuvholmen and Aker Brygge in Oslo. There they offer long-term loans to municipalities and county councils that want to develop welfare services. And the municipalities are attractive customers who borrow a lot of money. An analysis from Statistics Norway showed that the municipalities’ total debt quadrupled from 2000 to 2019. And the municipalities are still borrowing a lot, even after interest rates have skyrocketed. In the last year, the debt in the municipalities has grown by more than 9 per cent. It is far more than among private individuals and the business world. 700 million in dividends For the state, the municipalities’ debt has become a good store. This year, the state treasury was paid a record dividend from Kommunalbanken of NOK 700 million. In the last three years, the state’s dividend totaled over NOK 1.3 billion. State Secretary Ole Gustav Narud (Sp) says that proposals for dividends for the financial year 2024 will be presented in the state budget next week. Photo: Kambiz Zakaria / news This money does not necessarily benefit Kommune-Norge in any way. They go straight into the state coffers, just like dividends from other state-owned companies. – The state is the owner of Kommunalbanken in order to offer stable, long-term and efficient financing to the municipal sector. The objective is the highest possible return, says State Secretary in the Ministry of Local Government and District Affairs, Ole Gustav Narud (Sp), and refers to the state’s ownership notification. Lending director at Kommunalbanken, Lars Strøm Prestvik, says that the bank operates in a competitive market and must deliver good conditions. – The reason why we have such a high market share is that we can facilitate low borrowing costs for the municipality. – Could you give a lower interest rate instead of a dividend? – In a situation with smaller dividends or lower capital requirements, it would have been possible to offer even better interest rates in isolation, says Prestvik. In addition to Kommunalbanken, the state also owns a third of DNB, which has customer relationships with around 70 Norwegian municipalities. The chairmanship and the group leaders in Horten must do group work in order to get a better overview of the municipality’s financial challenges. Photo: Tom Ole Buaas / news Politicians without room for action For the local politicians in Horten municipality, the debt to the Kommunalbanken has become a nightmare when they have to make the math work out. – It is quite sad. Because politics is more and more about what we are going to cut and not what we want to talk about, says Mayor Christina Maria Bratli (Ap). – Is it right for the state to make money from the municipalities’ debt? – My message to everyone sitting in the Storting and in government is send us more money. We can’t do it out here in the municipalities. We cannot get more and bigger tasks without money being involved. In Midt-Telemark municipality, the interest expenses also contribute to a very tight municipal economy. The local politicians have made many cuts, but it is not enough. They have therefore received money from the State Administrator to engage the consultancy company PWC to find more possible savings measures. Mayor Siri Blichfeldt Dyrland (Sp) says that it is very hard to feel that you cannot get this to work. – It seems to me that there are societal mechanisms that mean that there are a great many municipalities that are having a tough time financially. Mayor of Midt-Telemark, Siri Blichfeldt Dyrland, is now getting help from the company Price Waterhouse Cooper to find more savings measures in the municipality. Photo: Tom Ole Buaas / news – And I hope that national politicians also notice that many municipalities are struggling, she says. Has invested in schools and nursing homes In Horten municipality, local politicians will receive extra training in finance, strategy and management this autumn. It can come in handy when they get a proposal for next year’s budget in their hands in November. Municipal director Finn-Øyvind Langfjell does not hide the fact that the debt of over 3 billion leaves little room for maneuver in the budget proposal that he will present. In three years, interest expenses have increased from NOK 58 million to NOK 128 million. – That money has to come from somewhere. And then there is the operation we have to draw from. – Should the surplus from the Kommunalbanken accrue to the municipalities? – It is a political question about which I shall not say much. What I can say is that it would mean a lot to the municipality with a slightly lower interest rate. – Why has the municipality got such a large debt? – Among other things, large, necessary investments have been made in water and sewage. We also pay for investments made in new school buildings and nursing homes, says Langfjell. Before: Old Fagerheim school in Horten was dilapidated when the pupils got a new school. Photo: Tom Ole Buaas Mayor Christina Maria Bratli denies that it is waste that has led to the debt problems in Horten municipality. – I mean that we have spent the money on necessary things. There are good municipal buildings and good infrastructure on the ground. It would also have been demanding now if we had been in danger of having to close a school because it is not good enough, she says. Now: New Fagerheim school in Horten is one of many investments in school buildings in Horten. The loan contributes to interest expenses. Photo: Tom Ole Buaas Published 27.09.2024, at 05.42
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The state receives large revenues from the municipalities’ debt – news Vestfold and Telemark – Local news, TV and radio
