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Virolahti faces potential economic supervision as financial stability remains uncertain

Tuesday 10th 2024 on 09:03 in  
Finland

The municipality of Virolahti, located on the eastern border, is at risk of entering a state economic supervision unless it can stabilize its finances. According to the local council, it is likely that the criteria for avoiding this situation will be met by the end of the year, which would mean that state oversight could commence in 2025.

State supervision refers to a review process mandated by municipal law, involving government representatives intervening in the financial decision-making of municipalities deemed to be in crisis. The local government expects to have a debt level exceeding €8,000 per resident by next year. Additionally, Virolahti has recorded budget deficits for several consecutive years since 2021.

This week, the municipal council will unveil a budget proposal that includes significant cuts, which the council must approve in its meeting next week to avoid the evaluation process enforced by the state. This assessment can occur if the municipality fails to cover accumulated deficits within the legally prescribed timeframe or if the deficit per resident exceeds €1,000 in the latest consolidated financial statement, with a minimum of €500 in the previous year. Alternatively, the required financial ratios must not meet the established thresholds for two consecutive years.

Proposed savings measures include reducing operating costs in early childhood education and basic schooling, increasing revenue through adjustments to various fees, and generating one-time revenue through asset liquidation.

Furthermore, negotiations are set to begin regarding potential layoffs affecting up to 20 employees, expected to conclude by the end of March. According to council officials, achieving a balanced budget will necessitate continued adjustments through 2027. The municipality aims for a break-even result for the upcoming fiscal year, while a solar energy project planned by Fortum could contribute nearly €300,000 annually to the local economy, offering a glimmer of hope for financial recovery.

Source 
(via yle.fi)