Reykjavik forecasts 2.8 billion krona surplus for 2027

Reykjavik’s budget for 2027 forecasts a 2.8 billion krona surplus in the city treasury, while the latest estimate puts this year’s deficit at 6.6 billion krona, mbl.is reported.

The budget, presented by Mayor Hildur Björnsdóttir, projects the treasury surplus rising to 6.9 billion krona in 2028, 9.5 billion in 2029, 12.6 billion in 2030 and 16.8 billion in 2031.

The city plans to have 130 fewer full-time positions in its A-part next year than this year, reducing salary costs by 2.3 billion krona. New borrowing is expected to be lower than loan repayments from 2028, while the A-part debt ratio is forecast to fall from 86 per cent to 73 per cent by 2031.

Central positions are to make up no more than 7.5 per cent of the city’s total workforce, down from a previous cap of 8.4 per cent. Revenues are forecast to increase by 5.6 per cent next year and operating expenses by 3.7 per cent.

The mayor said the city would protect frontline jobs and core services while reviewing its asset portfolio, sickness absence rates and procurement. New kindergartens are also planned in partnership with private operators.

Investment by the A-part is forecast at 23.6 billion krona in 2027. The budget also allocates 2.6 billion krona in capital contributions for building and buying public housing, and for companies in the B-part and associated companies.

This is the first budget from the new majority of the Independence Party, Viðreisn and the Progressive Party. The previous majority’s budget forecast a 3.4 billion krona surplus, but the city now expects a 6.6 billion krona deficit for this year. The updated estimate is 10 billion krona worse than forecast in last year’s budget.

The city attributes the deterioration this year to 1.6 billion krona less in revenue, 4.2 billion more in operating expenses, 2.3 billion more in depreciation and 1 billion more in investment. If the new budget projections are met, the result would improve by 9.4 billion krona next year. More than half of that change is expected to come from lower depreciation and finance costs, forecast to fall by 2.2 billion and 2.7 billion krona, respectively.