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Published: 3 June 2016

Incorporation of activities weakened the annual contribution margin of municipalities in 2015

The combined annual contribution margin of municipalities weakened from the year before by EUR 310 million, or by 14 per cent, which was particularly influenced by the drop in sales revenue of EUR 1.1 billion. The changes are explained by incorporation of municipalities' business activities in 2014, for example. These data appear from Statistics Finland's statistics on local government finances, for which financial statement data were collected from all 317 municipalities and all 146 joint municipal authorities.

Finances of municipalities and municipal groups in 2015, EUR million 1)

  Municipalities Municipal groups
Total Change, % Total Change, %
Operating revenue, total 7 553 -12,7 23 535 -
Operating expenses, total 36 493 -0,3 49 910 -
Annual contribution margin 1 912 -14,0 4 520 -
Net investments 2) 2 502 60,1 5 379 -
Loan stock 31st Dec 15 558 5,6 32 786 3,9
1) Preliminary data
2) Net investments = investment expenses - financing contributions for investment expenses - proceeds from transfers of non-current assets

Finances of municipalities and joint municipal authorities

The combined annual contribution margin of municipalities was EUR -28.4 billion. It weakened from the previous year by EUR 1.0 billion or 3.6 per cent. The weakening was particularly due to the decrease in sales revenues, down by EUR 1.1 billion or 25.1 per cent. Operating expenses went down by EUR 96 million or 0.3 per cent. The biggest decrease in operating expenses was seen in materials, supplies and goods, whose expenses went down from the previous year by EUR 552 million or 23 per cent. The changes are explained by incorporation of municipalities' business activities in 2014. Municipalities' incorporated activity is excluded from municipalities' financial statement data, but it is included in the financial statement data of municipal groups.

Municipalities' tax funding, which consists of tax revenue and central government transfers to local government, grew by EUR 627 million, up by 2.1 per cent. Of these, central government transfers to local government grew by EUR 37 million and tax revenue by EUR 590 million. The biggest part of the growth in tax revenue was formed by income taxes, which increased the revenue by EUR 341 million. Municipalities' share of corporation taxes increased by EUR 177 million. The increased tax funding did not, however, cover the fall in operating revenue and the annual contribution margin weakened by 14 per cent.

The annual contribution margin was negative for 16 municipalities and eight joint municipal authorities in 2015, while this was the case for 11 municipalities and seven joint municipal authorities in the year before. According to the combined financial statements, the annual contribution margin covered 91 per cent of depreciations in municipalities. The key figure in question weakened from the previous year, when the annual contribution margin covered 107 per cent of depreciations. Joint municipal authorities' annual contribution margin covered 137 per cent of depreciations and it strengthened from the year before, when the corresponding figure was 116 per cent.

Municipalities' combined loan stock grew from the previous year by EUR 818 million or 5.6 per cent. Municipalities' loan stock per capita was EUR 2,835, having been EUR 2,694 in the year before. Municipalities' equity ratio, or the ratio of equity to total capital, was 60.2 per cent. The ratio went down slightly from the previous year, when it was 61.1 per cent. In turn, joint municipal authorities' combined loan stock grew by EUR 48 million or 1.6 per cent. At the end of 2015, joint municipal authorities' loan stock totalled EUR 3.0 billion.

In 2015, municipalities' net investments were EUR 2.5 billion. The growth from the year before was 60.1 per cent, but the sum is still lower than the corresponding figure in 2013. Joint municipal authorities' net investments decreased by 4.2 per cent and amounted to EUR 732 million.

Finances of municipal groups

In 2015, the combined operating margin of municipal groups was EUR -26.3 billion, or thus EUR 2.1 billion stronger than the combined operating margin of municipalities. Groups' annual contribution margin was EUR 4.5 billion, that is, EUR 2.6 billion better than the combined annual contribution margin of municipalities. Not one municipal group had a negative contribution margin.

Municipal groups' combined loan stock grew from the previous year by EUR 1.2 billion or 3.9 per cent. Groups' loan stock per capita was EUR 5,987, having been EUR 5,775 in the year before. Municipal groups' net investments amounted EUR 5.4 billion.

The statistics comprise data on 303 municipal groups.  1)


1) Group financial statement data are missing from Luhanka of Mainland Finland municipalities. The rest of the missing data concern municipalities of ┼land.

Source: Local government finances 2015, preliminary data. Statistics Finland

Inquiries: Atte Virtanen 029 551 3685, Karen Asplund 029 551 3611, kuntatalous@stat.fi

Director in charge: Ville Vertanen

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Updated 3.6.2016

Referencing instructions:

Official Statistics of Finland (OSF): Local government finances [e-publication].
ISSN=2343-4163. 2015. Helsinki: Statistics Finland [referred: 22.2.2024].
Access method: http://www.stat.fi/til/kta/2015/kta_2015_2016-06-03_tie_001_en.html