Finnish Local Government. Association of Finnish Local and Regional Authorities
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1 Finnish Local Government Association of Finnish Local and Regional Authorities
2 Finland and its neighbours Murmansk Reykjavik Land boundary: with Sweden 596 km with Norway 722 km with Russia km Area km 2 Population Oslo Helsinki Stockholm Tallin Riga Copenhagen Vilnius St. Petersburg Moscow Dublin London Hamburg Amsterdam Berlin Brussels Gdansk Warsaw Minsk 2
3 Public Administration in Finland State Administration President (Elected) Parliament (Elected) Government Central Government Ministries Central Offices Regions Local Government Regional State Administrative Agencies (6) Regional Offices Regional Councils (20) Joint Municipal Authorities (e.g. hospitals) Joint Municipal Authorities (e.g. health care) Jurisdictional districts (90) Local authorities (342) (Municipal Council elected) 3
4 ADMINISTRATIVE LEVELS President Government Ministries National Boards CENTRAL ADMINISTRATION Regional State Administrative Agencies Other Regional State Administration Regional Councils Other Joint Municipal Authorities REGIONAL ADMINISTRATION LOCAL ADMINISTRATION State Local Administration Local authorities (342) State administration Municipal administration 4
5 The Association of Finnish Local and Regional Authorities The Association is made up of all Finnish local authorities and cities The Association also serves regional councils, hospital districts, joint municipal authorities for vocational training and other joint authorities Functions: expert services, promotion of municipal interests, research and development services Staff 300 Companies: FCG Ltd, Audiator (accounting), KL-Kuntahankinnat (public procurement), KL-Kustannus (publishing) and conference and congress hotel Gustavelund Nearly 1000 employees 5
6 The Association of Finnish Local and Regional Authorities 6
7 The Association's priority areas in (strategy) 1. Local government management and opportunities of local residents to contribute and make a difference 2. Local government services and service structure 3. Municipal finances 4. Viable local authorities and regions 5. Availability and competence of staff 6. Climate change 7. Local authorities and the market 8. Redefinition of the Association's policies and activities
8 The Association s services Social welfare and health care Education and culture Urban planning, infrastructure and the environment Municipal finances Legal matters Services to local government employers Regional and economic development Local government research and development Communications International affairs Information society Services in Swedish Statistics
9 Finnish Local Government - municipal administration in general 9
10 The Constitution of Finland Municipal and other regional self-government Finland is divided into municipalities, whose administration shall be based on the self-government of their residents. Provisions on the general principles governing municipal administration and the duties of the municipalities are laid down by an Act. The municipalities have the right to levy municipal tax. Provisions on the general principles governing tax liability and the grounds for the tax as well as on the legal remedies available to the persons or entities liable to taxation are laid down by an Act. Provisions on self-government in administrative areas larger than a municipality are laid down by an Act. In their native region, the Sami have linguistic and cultural self-government, as provided by an Act. 10
11 Municipal affairs and the Government Several ministries have responsibilities linked with local authorities. Ministry of Justice municipal elections and referendum legislation Ministry of Education basic services legislation central government transfers Ministry of Finance municipal taxation general municipal legislation& administration municipal economy, central govt transfers, analyses and calculations Central-local govt relationship Ministry of Employment and the Economy municipal infrastructure legislation regional development Ministry of Social Affairs and Health basic services legislation Central govt transfers Ministry of Transport and Communications municipal infrastructure legislation Ministry of the Environment municipal infrastructure legislation 11
12 The Finnish Local Government Act 8 Relationship between the State and local authorities The Ministry of Finance shall monitor the operations and finances of local authorities in general and ensure that municipal autonomy is taken into account in the preparation of legislation concerning local authorities. Following a procedural appeal, the provincial State office can investigate whether a local authority has acted in accordance with the current law. The legislation on local authorities, matters of municipal administration and finances that are important and far-reaching in principle, and coordination of State and municipal finances shall be dealt with in a negotiating procedure between the State and local authorities*, provisions on which will be laid down by decree. *The Association of Finnish Local and Regional authorities is the official representative of local authorities in Finland. 12
13 Number of municipalities Number of municipalities
14 Finland s regions and local authorities 19 regions and Åland 342 local authorities 14
15 Number of local authorities by size of population Residents < and over 7 (Population ) 15
16 Local government an important part of the public sector Local government expenditure accounts for over 30% of the total public sector expenditure and 2/3 of public consumption. Main responsibility for social welfare, health care, education and culture. Provider of infrastructure: e.g. traffic, power, water, sewerage, waste management, public transport and environmental protection ( carried out by joint municipal authorities or municipal companies and corporations). 50% of revenue is spent on social welfare and health care, ¼ on education and culture. Local authorities have a considerable freedom to decide how to spend their money. Staff costs account for more than half of the expenditure. Over 75% of all public sector employees work for local government. 16
17 Finnish local authorities provide basic public services for their residents (1) Finnish local authorities have wide responsibilities. These include both local functions and functions specified in various laws. The most important services provided by local authorities relate to education, social welfare and health care, and the maintenance of technical infrastructure. Education Local authorities maintain the national comprehensive school upper secondary school vocational education and training They also run libraries, and provide art classes liberal adult education cultural and recreational services. 17
18 Finnish local authorities provide basic public services for their residents (2) Social services and health care Responsibilities Child day care Welfare for the aged Welfare for the disabled Preventive and primary care services Specialist medical care Dental care Promotion of a healthy living environment 18
19 Finnish local authorities provide basic public services for their residents (3) Maintenance of technical infrastructure Responsibilities Town plan, supervision of land use and construction Water and energy supply Waste management Street and road maintenance Environmental protection Fire and rescue services Many of the services are produced together with other local authorities. For example, hospitals and many educational institutions are maintained by joint municipal authorities. Local authorities also seek to promote commerce and employment. Regional development and planning is the task of joint municipal authorities called Regional Councils. 19
20 Cooperation network of a local authority an example State Fire and rescue services Joint municipal authority, obligatory Specialist care Care of the disabled Regional planning Joint municipal authority, voluntary Vocational training Regional enterprise development support Regional portal IT support Local authority core Bookkeeping Personnel management Limited company Waste management Work centre Laundry service Cooperation by agreement Vocational upper secondary school/ Open university Libraries Legal aid Consumer counselling Release worker service Limited cooperation, agreement-based Primary care Administration of school sector Elementary/secondary school Special schools/special needs teachers (special groups) Liberal adult education Rural affairs secretary 20 Debt counselling Music schools Lobbying AA service Crisis support Region Sub-region Local authority
21 Employees in central and local government and the private sector Local govt Central govt Private sector Dep.for Municipal Affairs MM / Source: Local Authority Employers in Finland The public sector employs about 25% of all employees 21
22 DEVELOPMENT OF THE NUMBER OF PUBLIC SECTOR PERSONNEL ( : Public sector personnel, total) Employed by central govt Employed by local govt 22
23 Local government employees by sector (2010) Employees in total 433,000 Health care 30.5% Social services 27.0% Education and culture 26.0% Land-use planning and public works 4.0% Municipal enterprises 4.8% General administration 3.6% Real estate 2.2% Public order and safety 1.9%
24 Local government sector in Finland: expenditure and revenue Expenses Functions Revenue Payroll 39% Social welfare and health care 51% (Operating expenses and investments) Tax revenue 47% Social insurance contributions and pensions 12% Materials procurement 10% Services procurement 18% Subsidies 5% Debt servicing 4% Investments 10% Other expenditure 2% Education and culture 24% (Operting expenses and investments) Other 20% (Operating expenses and investments) Financing and other expenditure 5% Central government transfers 19% Sales of goods and services 27% Borrowing 4% Other 3 % Total municipal expenditure, 40.0 billion /2010 (local and joint authorities) Source: Association of Finnish Local and Regional Authorities 24
25 Right to levy taxes Local authorities finance their annual expenditure out of taxes, central government transfers, various charges and sales revenues. Local income tax paid by residents, real estate tax and a proportion of corporate tax account for almost half of all municipal revenue. Each local authority decides independently on its income tax rate. The average local tax rate is 18.5 percent of taxable income. 25
26 Municipality s main sources of revenue Taxes municipal income tax real estate tax a proportion of corporate income tax (tax on dogs) Operating revenue revenue from customer fees Central government transfers for operating expenses from Ministry of Finance ( /inhabitant) from Ministry of Education and Culture ( /student) from Ministry of Social Affairs and Health ( /inhabitant) Central government transfers for investments On the average, 2/3 of the investments financed by taxes & transfers, 1/3 by loans) 26
27 Municipal taxes in a nutshell Local authorities have the right to levy municipal tax (Constitution, Section 121(3)) Municipal income tax Local council decides on tax %, not limited 2009: average close to 18.60% Real estate tax Local council decides on tax %, within limits (for example % of the taxable value of a detached house) Unbuilt lot higher taxation, some charitable organisations can be given tax-free status Local government proportion of corporate income tax Local authorities receive a 22.03% proportion of corporate income tax The proportion of an individual local authority is assessed based on the taxable income of companies within the local authority area If a company or its affiliates have operations in several local authorities, their taxes are added together and the proportion of corporate income tax is divided between the local authorities in proportion to the number of company personnel in each local authority. 27
28 Local government tax revenue , billion Current prices according to the accounts of local authorities Real estate tax etc. Corporate income tax Municipal income tax e 11e 12e Sources: Years Statistics Finland. Estimates for from the basic public services budget Juhani Turkkila/hp
29 Local government sector revenue Tax revenue 46%, 18.6 billion Central government transfers for operational finances, 19%, 7.8 billion Operating revenue 26%, 10.7 billion Investment 3%, 0.8 billion Estimate for 2011 (external revenue) Borrowing 5%, 1.9 billion Other revenue 2%, 0.8 billion Total 40.6 billion euros
30 Local government sector expenditure Social welfare and health care 50%, 20.3 billion Education and culture 22%, 8.9 billion Other operating expenditure 14%, 5.5 billion Investment expenditure 9%, 3.8 billion Estimate for 2011 (external expenditure) Debt servicing 4%, 1.6 billion Other expenditure 1%, 0.3 billion Total 40.4 billion euros
31 Municipal income tax rate % ,5 19,0 18,5 18,0 17,5 17,0 16,5 16,0 15,5 15,0 14,5 14,0 13,5 13,0 12,5 12,
32 Local government tax revenue and central government transfers 1) At 1995 prices, 1990= Tax revenue Central govt transfers Tax revenue and transfers total * 09e 1) Central govt transfers for are not directly comparable. They have been made more comparable by subtracting the contributions paid by local authorities to the Social Insurance Institution and by adding certain govt transfers and grants in the national accounts for , e.g. employment subsidies and unit-cost based financing received by joint municipal authorities. The actual tax revenue development also depends on the recovery of VAT refunds to municipalities: revenue losses are compensated by reducing the municipalities proportion of revenue from corporate income tax. 33
33 Volume of services 34
34 WELFARE SERVICES FOR PEOPLE LOCAL AUTHORITIES HAVE AN OBLIGATION TO CREATE AND ENSURE THE BASIC CONDITIONS FOR THE WELFARE OF THEIR RESIDENTS 2003 Microsoft Corporation 2003 Microsoft Corporation 35
35 FOUNDATION FOR PUBLIC HEALTH CARE dentists at health centres EUR per capita for municipal health care Over hospital beds 2003 Microsoft Corporation 30.8 million outpatient visits to health centres 2003 Microsoft Corporation LOCAL AUTHORITIES PROVIDE MOST OF THE HEALTH CARE SERVICES 36
36 CARING FOR PEOPLE - FROM INFANTS TO THE ELDERLY EUR 1300 per capita for municipal social services Home help services to senior citizen households Microsoft Corporation Municipal day care for children 2003 Microsoft Corporation 2003 Microsoft Corporation Services for disabled LOCAL AUTHORITIES HAVE THE MAIN RESPONSIBILITY FOR PROVISION OF SOCIAL SERVICES 37
37 WE LIVE AND LEARN students in municipal vocational education institutes and in polytechnics More than pupils in municipal primary and secondary schools 2003 Microsoft Corporation 2003 Microsoft Corporation students and over 2 million lessons in municipal and private adult education centres 2003 Microsoft Corporation LOCAL AUTHORITIES PROVIDE THE MAJORITY OF EDUCATION SERVICES 38
38 A WIDE RANGE OF CULTURAL AND LEISURE ACTIVITIES 107 million library loans per year 2003 Microsoft Corporation 3.4 million visits to theatre, dance and opera performances sports places visits to concerts 2003 Microsoft Corporation LOCAL AUTHORITIS OFFER A WIDE RANGE OF CULTURAL AND LEISURE SERVICES 39
39 DYNAMIC COMMUNITY TECHNOLOGY Local authorities treat annually 2.2 million tons (all) of community waste 30% of all road traffic takes place on streets and highways maintained by local authorities Of all public transport, 69% of passengers use municipal transport services LOCAL AUTHORITIES PROVIDE COMMUNITY-BASED TECHNOLOGY SERVICES 40
40 COMMUNITY PLANNING Over km 2 of master planned land areas km 2 of physical planned land areas in cities and shores Active business policy Diverse residential environments km 2 land reserved for protected, recreational, agricultural and forest areas 2003 Microsoft Corporation 2003 Microsoft Corporation Care of human landscape LOCAL AUTHORITIES ARE RESPONSIBLE FOR GOOD RESIDENTIAL ENVIRONMENTS 41
41 SERVICES TO ENSURE OPERATIONS Municipal harbours account for 90% of exports 65% of imports District heating to more than 2 million people Municipal waterworks distribute 87% of the water used LOCAL AUTHORITIES PROVIDE BASIC SERVICES FOR COMMUNITY OPERATIONS 42
42 Democratic self-government based on the Constitution Local government organisation 43
43 PARTY SUPPORT IN MUNICIPAL ELECTIONS 2008 National Coalition Party Social Democratic Party Centre Party of Finland 23,50 % 20,80 % 21,2 % 24,1 % 20,1 % 22,8 % Green League 8,9 % 7,4 % 2008 Left Alliance True Finns Party Swedish People's Party Christian Democrats Other groups and parties 0 % 5,40 % 4,7 % 5,2 % 4,2 % 4,0 % 3,1 % 5,2 % 8,8 % 9,6 % ,0 % 5,0 % 10,0 % 15,0 % 20,0 % 25,0 % 30,0 % 44
44 Percentage of women in municipal councils 100 % 90 % 80 % 70 % 60 % 50 % 40 % 30 % 20 % 10 % 0 % 10,7 14,7 18,1 22,2 25,2 27,2 30,0 31,5 34,4 36,4 36, women men 45
45 DEMOCRATIC SELF-GOVERNMENT BASED ON THE CONSTITUTION The decisionmaking power of local authorities is exercised by a council elected by the residents. Finland is divided into municipalities, whose administration shall be based on the selfgovernment of their residents. (The Constitution of Finland, Section 121 (1)) 2003 Microsoft Corporation Local authorities have the right to levy taxes The State may not assign new duties to local authorities or deprive them of duties other than by passing legislation to this effect FINLAND IS DIVIDED INTO LOCAL AUTHORITIES WHERE THE AUTONOMY OF RESIDENTS IS SAFEGUARDED IN THE CONSTITUTION (The Local Government Act, Chapter 1, Section 1). 46
46 Transparency of functions and decision-making Finnish local authorities have a high level of autonomy guaranteed by the Constitution. Transparency and access to information are the core principles of Finnish local government. The Local Government Act emphasises not only representative democracy but also opportunities for residents to contribute and make a difference locally. 47
47 Municipal organisation COUNCIL Auditors MUNICIPAL EXECUTIVE BOARD MUNICIPAL COMMITTEES Main tasks: Education and culture Social welfare and health care Environment and technical infrastructure 48
48 Municipal organisation Every four years residents elect a local council in free and democratic elections. The council is the decision-making authority in municipal finances and operations. The municipal executive board, which is appointed by the council, does the preparatory work on matters coming before the council. The board is responsible for the municipality s day-to-day administration and financial management. In Finland, the municipal manager is an official appointed by the local council, who serves under the municipal executive board. 49
49 50
50 51
51 Political Representation of Municipal Bodies City Council (municipality with inhabitants) 67 councillors elected in 2004 municipal elections representing 6 political parties City Board 13 members, 5 political parties represented Mayor Committees A municipality may use the designation "city" when it considers that it meets the requirements for an urban community Number of councillors vary from 85 to 13 depending on the size of municipal population Members of the municipal board are elected in proportion to the political representation in the council. The same principle applies to all other municipal political bodies Proportion of both sexes at least 40% in all municipal bodies, the council exclusive (Equality Act) Mayor (municipal manager) is an officeholder appointed by the council for an indefinite or definite term. He/she is not directly elected nor a member of the council or the board 52
52 Proportional election of the City Board 67 number of seats in the City Council 2 13 seats available in the City Board Method of proportional election = 67/ For each 5 Council seats a party / Council group is entitled to claim one seat at the Board Proportional election is applied to all municipal bodies. By combining their forces even small groupings can win a seat in a municipal body. 53
53 Regional Councils ASSEMBLY Elected by the councils of member municipalities BOARD Elected by the Assembly OFFICE STATUTORY TASKS Regional policy Regional development authority Regional development programmes of the E U International cooperation Regional physical planning VOLUNTARY TASKS 54
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