Tallinn city budget for 2022 to exceed a billion euros

Tallinn City Government has approved the draft city budget for 2022 with a total of €1.033 billion in revenue and expenditure, €76.4 million or 8% more than this year's revised budget.

Tallinn Mayor Mihhail Kõlvart said that this year’s economic recovery is forecast to continue next year. "This means that employment and wages will grow more rapidly than anticipated, which will also increase the amount of personal income tax received by the city," Kõlvart said. "On the other hand, the city is planning to increase the salaries of city employees, including those in education, culture, sports and youth centres. We will raise the minimum wage for teachers and cultural workers by €100, and also plan to increase the wages for social workers and bus, trolleybus and tram drivers."

"Investments planned in the city budget will almost double next year compared to this year. A significant part of this will be investments in green transition. These are investments into the future that will improve the quality of life for the citizens of Tallinn, including procuring environmentally friendly buses and trams, in creating and renewal of parks, and in making urban space more convenient for pedestrians and cyclists. Investment in the cultural sector is also increasing, and in particular the construction of the City Theatre, the Botanical Garden and the Zoo. The growth of investment in the health sector is to the first preparatory stages of building the new Tallinn Hospital. We have also earmarked one million euros in the city budget reserve for COVID-19 prevention measures," Kõlvart added.

According to the draft budget, the city's operating revenues will increase by 8.7 percent and operating expenditure by 6.5 percent compared to the revised budget for 2021.

Operational expenditure in the 2022 budget of the City of Tallinn is planned at €746.7 million. Of this, 39.1 per cent, or a total of €292 million, will be spent on education. Urban transport costs will account for 15.2 percent, or €113.3 million in total. Expenses on social welfare and health will account for 11.3 percent of total expenditure, totalling €84.3 million. Together, these three areas will make up nearly two thirds of total expenditure.

The draft budget foresees €269 million for investment in 2022, almost twice as much as the 2021 revised budget. A quarter of this (25.2 percent) will be spent on roads and streets, with a total of €67.7 million planned for the repair and reconstruction of roads and streets. Investment in education will account for 22.3 percent of total investment, totalling €59.9 million. Urban transport accounts for 15.9% of total investment, rising to €42.8 million, which will spent on upgrading the public transport network and purchasing 150 new buses and trams. In total, investment in roads and streets, education and urban transport will account for almost two thirds of all investment planned for the year.

Investment in the cultural sector accounts for €28.9 million of the budget, while investment in the health sector rises to €14.4 million, including the costs of the design of Tallinn Hospital.

The city's total revenue for 2022 is projected at €868.5 million, of which 68% is tax revenue. The city's largest source of revenue is the personal income tax, amounting to €556 million, or 11.8 percent more than projected for 2021. Land tax is projected to be €25.4 million in 2022, the same as this year. Revenues from the sale of goods and services by the city's institutions are projected to be €90.1 million, or 9.3% more than in the 2021 revised budget.

Grants from the state and other institutions amount to €149.9 million. External financing is projected to increase by €14.4 million to €23.9 million, mainly related to the Tallinn Hospital project.

The city's operating result is projected at €84.1 million in 2022, in line with the requirement of the Local Government Financial Management Act that the expected operating result must be zero or positive.

To finance the city's investments, the Tallinn plans to borrow up to €90 million in 2022, which together would result in an estimated net debt burden of 32.3 percent of the city's operating revenues by the end of 2022, which is within the lawfully permitted 80 percent. 19.2 million euros is planned for debt service next year, of which €16.2 million is planned for principal repayments of the of municipal loans and bonds, and €3 million for interest payments.

Tallinn residents will be able to direct the use of €1 million from the city budget for 2022, which is the amount of the participatory budget.