Rautalampi industrial project exceeded its allocation by €850,000

An independent review has found serious failures in the budgeting and oversight of an industrial area project in Rautalampi, where spending last year exceeded the allocated amount by about €850,000, Yle reports. Decision-makers were also given incorrect information about costs, the review found.

The project cost more than €1.6 million. The municipality is due to receive €950,000 in EU support, while its own contribution is nearly €660,000. The budget overrun does not mean the project’s total costs exceeded the budget by the same amount.

The municipality commissioned accounting firm Talvea to examine decisions, cost monitoring and information provided to decision-makers across the project from 2023 to 2026. The review found that the investment was not handled in line with the Municipalities Act, the municipality’s internal guidelines or its rules on decision-making powers.

The project was budgeted on a net basis, meaning the municipality included only its own share in the budget and counted grants before they were paid. The annual allocation was therefore insufficient to cover bills as they came due.

Under the Municipalities Act, a municipal council can choose net budgeting, but it must make a separate decision to use it. Rautalampi’s council had not done so, according to Jarkko Pesu, a lecturer in administrative law at the University of Eastern Finland. He described the budgeting as a basic error and said decisions on contracts had been made without an allocation approved by the council.

Last year, the municipality had budgeted €210,000 for the project, while actual spending exceeded €1 million. The allocation has also been exceeded this year, by €224,000, according to the article.

Pesu said the errors could lead to EU support being reclaimed. The municipality had previously said on its website that the project’s total costs had been presented through official procedures and that investments had not been made without proper administrative decisions or authority.

Yle asked the municipality’s technical director, Ari Lindgren, and municipal manager, Anu Sepponen, for comment. They said they would respond after the municipal council had considered the matter.