Borgarbyggð reports 287 million króna loss after five months

Borgarbyggð’s operations were 231 million krónur below budget after the first five months of the year, mbl.is reports. The municipality recorded a loss of 287 million krónur, compared with a budgeted loss of 56 million.

The figures come from Borgarbyggð’s five-month financial statement, which was presented to the municipality’s executive council on Thursday.

The shortfall was largely caused by lower revenues. Contributions from the Municipal Equalisation Fund were 150 million krónur below budget, while other revenues were 135 million below projections.

Municipal tax revenues were 84 million krónur higher than expected, and expenses were 53 million below budget. Financial costs, however, were 40 million higher than planned.

The executive council said the results called for tighter financial management and targeted monitoring of expenditure.

The council said action was needed during the second half of the year to improve the municipality’s financial performance and strengthen its operating position.

It also expressed serious concern about the reduction in contributions from the Municipal Equalisation Fund. An initial impact assessment of changes to the fund had projected a 177.7 million króna increase in revenue for Borgarbyggð, but the municipality is instead facing a substantial reduction in contributions.

The council said the assumptions behind the fund’s new allocation model appeared to particularly disadvantage geographically extensive municipalities with many population centres.