Kemi challenges €3.4m state bill in administrative court

Kemi city has appealed to the Northern Finland Administrative Court over a state funding decision that requires it to pay €3.4 million a year to the government, Yle reports.

The Ministry of Finance decided in December that Kemi would receive no state funding. Instead, the city must pay the government more than €166,000 a month.

Municipalities normally receive state funding to provide statutory services such as schools and early childhood education. In Kemi’s case, the arrangement has been reversed.

Ministry rejected Kemi’s appeal

Kemi sought to have the decision changed in February, arguing that the situation was unreasonable. The city questioned how it could provide its statutory services while also paying money to the government.

According to the city, the Constitution clearly requires the government to ensure that municipalities have sufficient funds to carry out their statutory duties. Kemi said it was therefore completely backwards for the city to subsidise the government.

The Ministry of Finance refused to change its decision. In a response sent to Kemi in June, the ministry said the state funding had been calculated in accordance with the law and that it could not disregard the legislation.

Case moves to court

Kemi filed an appeal with the Northern Finland Administrative Court in July. The city is asking the court to exclude the equalisation payments linked to the social and healthcare reform from its calculation, arguing that they conflict with the Constitution.

If that request is rejected, Kemi wants the entire state funding calculation to be left out in its case. The city would then receive no state funding but would not have to pay money to the government either.

Kemi is also prepared to take the matter further by asking the Chancellor of Justice to investigate it.

Kemi is not the only municipality facing this situation. More than a dozen municipalities in Finland have negative state funding for basic services this year.

The unusual funding arrangement is the result of the funding model for wellbeing services counties and its equalisation system.