Or will there be a new and better distribution of income to the municipalities?
Municipalities are struggling to cover necessary needs, this is happening all over the country, even municipalities that were supposed to “get it so much better” through municipal mergers are struggling. Local newspapers are full of descriptions of needs that are not being met and employees in municipal businesses who can’t take it anymore and resign.
The municipalities have also had a lot of increased expenses due to orders regarding both the one and the other due to our EEA agreement and the fact that we implement “all EU directives” – it costs money!
We also see that the discussions between the municipalities, and especially between city and district municipalities, have started, it can quickly become a battle between the municipalities.
The government has promised to come up with a proposal for a new distribution of income to the municipalities during this spring.
50 mayors demand more money
Birgitte Gulla Løken (H), who is the mayor of Larvik, is one of the 50 mayors who believe that the economic differences between the municipalities are far too great. She has been a leading figure for the poor municipalities to get more money to spend with.
This printer The nation March 4.
During the spring, the government in the form of Local Government and District Minister Erling Sande (SP) will present a notification to the Storting with changes to the municipality’s income system. The municipalities have high expectations and hope that this will be a fairer system. In 2022, 305 of the country’s municipalities had tax revenues below the national average, and the differences between the tax-weak and tax-rich municipalities are increasing. With SP in government, the municipalities naturally hope that the government will propose a somewhat more equalizing district policy.
Mayors across the country have signed a petition, where they demand that the citizens of Norway must receive equal services regardless of where they live in the country.
The mayors are from many different parties and represent 1.3 million inhabitants, according to a press release. These have signed the petition:
Alvdal municipality, Arendal municipality, Askøy municipality, Bamble municipality, Bjørnafjorden municipality, Drammen municipality, Drangedal municipality, Eidskog municipality, Elverum municipality, Flesberg municipality, Fredrikstad municipality, Færder municipality, Gausdal municipality, Gran municipality, Grue municipality, Halden municipality, Holmestrand municipality , Horten municipality, Indre Østfold municipality, Iveland municipality, Jevnaker municipality, Kongsvinger municipality, Kragerø municipality, Larvik municipality, Lillestrøm municipality, Lunner municipality, Lyngdal municipality, Midt-Telemark municipality, Nes municipality, Nord-Odal municipality, Os municipality, Porsgrunn municipality , Rakkestad municipality, Sandefjord municipality, Sarpsborg municipality, Siljan municipality, Skien municipality, Steigen municipality, Stjørdal municipality, Strand municipality, Søndre Land municipality, Sør-Odal municipality, Tolga municipality, Tromsø municipality, Tvedestrand municipality, Ullensaker municipality, Vegårshei municipality, Vennesla municipality, Ålesund municipality, Åsnes municipality.
The starting point for the Norwegian welfare system is that citizens should receive equal services regardless of where they live and how much they earn, write the 50 mayors in the petition. They are clear that people do not receive equal services today. Today, tax revenues are only equalized to a certain extent.
The government writes this on its pages:
This is how the insect system works
- All residents of Norway have the right to the same good services, regardless of which municipality you live in.
- The municipalities are nevertheless different: different sizes, geography, demographics and the people who live there earn different amounts of money.
- Some municipalities have wealthy residents, and therefore receive large tax revenues. Other municipalities have poorer residents and perhaps also residents who need more support and help.
- Approximately 40 per cent of the municipality’s income comes from tax income from the residents.
- The state also redistributes part of the tax revenue, so that the differences are not too great.
- Municipalities with tax revenues lower than the average per inhabitant in the country will be compensated for 60 per cent of the difference between the municipality’s tax revenues and the national average.
- They are therefore not fully compensated, which means that there is a difference how much revenue the municipalities have per capita.
- There are also separate grants for so-called regional political purposes, such as extra money for the municipalities in the far north of the country or those with metropolitan challenges.
- In addition, there is a “discretionary allowance” to compensate for special local conditions.
- In 2024, the Storting will adopt a new revenue system for the municipalities.
- In August 2022, a government-appointed committee presented a proposal for a new system.
Source: Reggeringen.no
Several of the 50 municipalities that have signed the petition receive between 93-95 percent of what the average municipality receives in tax revenue, and rich municipalities such as Bærum get 128 percent and the power municipality Bykle gets 153 percent. 80% of the municipalities are below the national average.
It was after a conference in Larvik in January that this mayoral appeal was written. The conference that was held at Sliperiet in Larvik had several presentations and the municipalities’ situation was clearly explained in these presentations, under the heading: Municipality-Norway in 2024 – on the brink of collapse? How does the situation affect our residents?
Three municipal directors shared their experiences, it was Børge Toft, municipal director in Harstad municipality, Bjørn Fauchald, municipal director in Vestre Toten municipality and Camilla Dunsæd, municipal director in Kristiansand municipality.
Here you can see a recording of the entire conference: https://larvik.kommunetv.no/archive/248
NRK Nordland writes about Moskenes municipality on Friday, it is the municipality that in February threatened to bankrupt itself if they did not get help.
https://www.nrk.no/nordland/lofoten_-moskenes-kommune-vil-sla-seg-selv-konkurs-om-de-ikke-far-hjelp-1.16760106
They are not alone in this crisis and if Moskenes does not get its finances in order, there will be major knock-on effects for other municipalities as well. Norwegian municipalities have a debt of NOK 700 billion.
KLP is concerned that this will affect the municipal loan market and has sent letters to the Ministry of Local Government and Districts, and the Ministry of Finance.
To NRK Nordland, Carl Steinar Lous, director of public markets at KLP Bank, says this:
What we are concerned about is that uncertainty will spread among those who finance the municipalities that there is a higher credit risk in the municipal market than is assumed. We are concerned that interest rates, or the credit mark-up as it is called, will increase. This means that you get a higher interest rate with the municipalities.
https://www.nrk.no/nordland/krisa-til-moskenes-kan-ramme-heile-kommune-noreg-1.16855103
