Seltjarnarnes reviews spending as costs exceed budget

Seltjarnarnes’ finances are under heavier pressure than budgeted, and the municipality is reviewing operations to reduce spending, town council chair Elísabet Einarsdóttir told mbl.is.

In an article in Nespósturinn, Einarsdóttir said inflation, high interest rates and rising costs had significantly affected the municipality. She said it also needed to examine its own spending critically.

The municipality has introduced a temporary hiring freeze and tighter controls on overtime. It has also reduced town councillors’ compensation and changed how it is paid, with total payments expected to fall by up to 18%. The mayor has decided to cut his own salary by 10%.

Asked whether the municipality was preparing layoffs, Einarsdóttir said the matter remained undecided. So far, the review had focused mainly on individual budget items, she said, noting that the hiring freeze was in effect.

The review covers all municipal institutions, including swimming pools, libraries, schools and the municipal maintenance department. It is examining opening hours, shift schedules and staffing. A comparison with other municipalities suggests some Seltjarnarnes institutions have longer opening hours than comparable facilities elsewhere, but no decisions have been made in advance about changes that could reduce services.

Einarsdóttir said the municipality aimed to balance its finances over the next two years, although that would depend in part on economic conditions. It is also considering selling assets to pay down debt. Further cost-saving proposals are expected to be presented to residents in the coming weeks as the budget is prepared.

She said earlier plans had anticipated a return to balanced operations. The Covid period had harmed municipal finances, while work to address mould had taken time and money. More recently, high interest rates and inflation had added to the pressure.