Reykjavik targets 9.4 billion króna budget turnaround

Reykjavik is forecasting a 9.4 billion króna improvement in its finances next year, as the city’s new governing majority proposes reducing costs and protecting front-line services, mbl.is reports.

Mayor Hildur Björnsdóttir presented the coalition’s first budget proposal, for 2027, at a news conference in Höfði. If the plan is achieved, the city’s financial result will improve by 9.4 billion króna compared with the updated forecast for this year.

Björnsdóttir said the budget was based on cautious planning, noting that the city was heading for a substantial operating deficit this year and that the current plan had been too optimistic. She said the city was prepared to make tougher decisions and had already reduced staffing in central administration.

A group tasked with finding further savings is now examining the city’s assets, procurement and staff sickness absence. The budget assumes 130 fewer full-time positions in the city’s core operations next year and a 2.3 billion króna reduction in payroll costs.

The city completed the third and final round of its cost-cutting measures at the end of October. Björnsdóttir said she did not expect further layoffs in central administration to be launched by the savings group, although department heads would retain their usual authority to hire or dismiss staff according to operational needs.

The proposal says front-line jobs and basic services will be protected. Björnsdóttir said this includes staff providing direct services to residents in schools and preschools, as well as workers maintaining public spaces.

The budget will have a second reading in December. Its assumptions will be reviewed before then, including inflation forecasts, which Björnsdóttir expects may rise. She said she did not expect that change to have a significant effect and that the city would continue to forecast a positive result.