Lapland urges end to funding rule that has cut it €200m

Lapland’s wellbeing services county is again urging Finland’s Ministry of Finance to remove a funding adjustment that has cut its allocation by more than €200 million in four years, Yle reports. The ministry says the adjustment could be phased out at some point, but doing so would require a change to the law.

The adjustment, known as transition equalisation, was introduced to balance funding as responsibility for social, health and rescue services moved from municipalities to wellbeing services counties. It reduces funding for some counties and increases it for others.

In Lapland, the cuts are expected to total nearly €300 million between 2023 and 2029. The county says the adjustment has added to its large deficit and the need for savings. North Karelia’s funding has been cut by about €250 million over the first four years. Southwest Finland has lost more than €350 million, although the share is smaller when measured against its population.

Lapland wellbeing services county director Jari Jokela says the adjustment’s effects must remain on the agenda or they risk being overlooked. Lapland’s cuts are largely linked to municipalities having underbudgeted and increased staffing shortly before the transfer of services, the report says.

Lapland is Finland’s largest wellbeing services county by area and has the country’s lowest population density. Funding based on population density accounts for about 12 per cent of its allocation, compared with an average of about 1.5 per cent across the counties. The county estimates that it will receive €130 million on this basis this year, while transition equalisation will reduce its funding by €46 million.

Ville-Veikko Ahonen, head of the Ministry of Finance’s department for steering wellbeing services counties, said several factors affect a county’s financial position, including costs, decision-making and the ability to reform services. He said there was a case for ending transition equalisation over time, but it is currently set out in law. Removing it would reduce funding for some counties, making parliamentary approval difficult.

North Karelia supports Lapland’s appeal. Its finance director, Ismo Rouvinen, said the county had made more than €90 million in operational adjustments over four years. A separate update to the funding model, intended to better reflect service needs across regions, is due to take effect at the start of next year.