Reader’s opinion|The financial management of municipalities is further challenged when the predictability of state shares becomes more difficult and the uncertainty of financing increases.
Municipalities the role changes again. In January 2025, employment expert organizations will significantly increase the number of personnel in municipalities and responsible municipalities, when the management of employment is transferred from the state to the municipalities. The test includes not only employment care organizations, but the entire municipal organization with shared services.
Leadership in order to carry out change is needed both within municipal organizations and also in stakeholder group work. The decision on whether municipalities manage employment or unemployment significantly determines stakeholder group work.
Only a year and a half has passed since the last big change, i.e. social security reform. In some areas, integration was prioritized, in a large part of Finland the integration work only started when forced. So much time has passed since the reform that the clearly deficit social welfare sector receives both justified and unjustified criticism.
After the Social Security reform, about a third of the municipalities’ activities are cultural activities, and after the road reform, the share of vitality and employment activities will increase significantly. The effects of the social security reform on municipalities’ decreasing state contributions have been a negative surprise for many municipalities. How are the effects of the road reform expected on the municipalities’ finances with mixed feelings of fear? Who really believes that the model is cost-neutral for municipalities?
The financial management of municipalities is thus challenged even more when the predictability of state shares becomes more difficult and the uncertainty of financing increases. In the long term, the economic management of municipalities is strongly influenced by the vitality and birth rate of municipalities.
Birth the decrease in most of Finland and the increase in the number of elderly people decrease the income from municipal tax in the municipalities and at the same time increase expenses in the social security sector. By investing in vitality work, the share of corporate tax distributed to municipalities increases, and as employment improves, the rising revenue from municipal taxes can improve the situation. However, does vitality work become a victim when statutory basic services such as early childhood education and basic education are at stake? Vitality and well-being are also strengthened by secondary and higher education, sports, culture and leisure activities. Where do we save and where do we invest so that the municipality remains viable in general?
Leading office holders and decision-makers are now especially required to be alert, adaptable, flexible and responsive. Nothing else is more certain in the management of the municipal sector than constant change.
Milla Bruneau
management direct search consultant, municipal and regional councillor, Lahti
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