Sharp decline in tax revenue forces Espoo to slash spending
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The economic slump is having an extensive impact on the City of Espoo, Helsinki’s neighbour to the west.
Espoo Mayor Marketta Kokkonen said on Thursday that the city needs to cut spending by tens of millions of euros, following a dip in income tax revenue, and a sharp fall in money from corporate taxation.
This year Espoo tax income is expected to fall about EUR 50 million from previous forecasts. The slump has slashed corporate earnings, leading to a reduction in tax revenue. In 2010 the shortfall is expected to be nearly EUR 80 million, and in 2011 it will be more than EUR 101 million.
Espoo municipal services for this year were planned on the basis of earnings estimates made in late 2008. However, in January alone, city income was EUR 12 million less than predicted.
Pressures to cut costs will affect social and health care services, education, and public works.
Juha Metso, the city’s head of social services, says that the decreased spending would be reflected in services, but added that the aim is to minimise the impact.
“This is a very tough joint effort”, Kokkonen said at a strategy seminar held for the Espoo City Council.
“If nothing is done, in 2010 we will have to take tough measures, and start cutting jobs. We must not let that happen”, Kokkonen said.
The Mayor does not want to cut back on investments, which she sees as “stimulus measures”.
Temporary and permanent redundancies will be reflected in tax revenue in 2010. Mayor Kokkonen warned that if spending is not cut, services will be operated on borrowed money, and city employees will have to be made redundant.
Reijo Tuori, Espoo’s head of finance, said that he expects similar news from other cities as well.
Helsingin Sanomat
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| 30.1.2009 - TODAY |
 Sharp decline in tax revenue forces Espoo to slash spending |
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