Inquiry concerning the revenue base of local governments (No. 802)
Session: 15th Riigikogu, 6th Session, Plenary Sitting
Date: 2025-10-13 20:37
Participating Politicians:
Total Speeches: 64
Membership: 15
Agenda Duration: 42m
AI Summaries: 64/64 Speeches (100.0%)
Analysis: Structured Analysis
Politicians Speaking Time
Politicians
Analysis
Summary
The Riigikogu debated Inquiry No. 802, submitted to the Minister of Regional Affairs and Agriculture, Hendrik Johannes Terras, concerning the state of the revenue base for local governments (LG). The inquiry was submitted by Riigikogu members Anti Allas, Reili Rand, and Jaak Aab from the Social Democratic Party faction. The questioners emphasized the need to ensure equal and accessible public services in all Estonian regions and sought clarity regarding the impact of the so-called Robin Hood measure.
Minister Terras responded to six questions, refuting the claim made by Tartu Deputy Mayor Meelis Leidt that the Robin Hood measure would take 14 million euros from Tartu over three years. According to the Minister’s analysis, the total impact of the Robin Hood measure on the city of Tartu between 2025 and 2028 is approximately 8.7 million euros, which is significantly less than the city's projected increase in land tax revenue. Terras confirmed that the Robin Hood reform is working as expected, reducing financial inequality among local governments. The negative impact affects approximately one-fifth of local governments (mainly in Harju and Tartu counties), while nearly 80% of local governments, including regional centers and sparsely populated rural municipalities, benefit from it. The Minister highlighted that the biggest structural problem for local governments is decreasing financial autonomy, as only 2.3% of revenues come from local taxes. Future plans foresee transferring state subsidies (e.g., funding for basic schools and local roads) into the permanent revenue base of local governments and creating a legal framework for new local fees (e.g., development fees for solar parks and social infrastructure). During the subsequent discussions, Riigikogu members emphasized that Estonia needs a broad political debate on the division of tasks and funding between the state and local governments.
Decisions Made 1
No decisions were made
Most Active Speaker
Anti Allas (Social Democratic Party, left) was the most active representative of those submitting the query, delivering the introduction to the interpellation, posing clarifying questions, and giving a lengthy closing statement, where he stressed the necessity of achieving regional equality and giving concrete substance to financial autonomy.
Aseesimees Toomas Kivimägi
AI Summary
Deputy Speaker Toomas Kivimägi announced the commencement of proceedings regarding Interpellation No. 802 (concerning the revenue base of local governments), submitted to the Minister of Regional Affairs and Agriculture, Hendrik Johannes Terras, by Riigikogu members Anti Allas, Reili Rand, and Jaak Aab, and asked Anti Allas to take the floor for the presentation on behalf of the interpellators.
Aseesimees Toomas Kivimägi
AI Summary
Deputy Speaker Toomas Kivimägi introduced the fifth item on the agenda: the interpellation submitted by Riigikogu members Anti Allas, Reili Rand, and Jaak Aab to the Minister of Regional Affairs and Agriculture, Hendrik Johannes Terras, concerning the revenue base of local municipalities. He then invited Anti Allas to the rostrum to deliver the presentation on behalf of the interpellators.
Anti Allas
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
Anti Allas introduced the interpellation by the Social Democratic Party faction concerning the revenue base of local governments and ensuring the equal accessibility of essential public services. He explained that, to alleviate the situation, the social democrats have implemented the so-called Robin Hood measure, which increases revenue in regions with older residents. He then requested the responsible minister to provide clarity regarding the funding situation and the impact of the measure, so that the next necessary steps could be taken during the state budget proceedings.
Anti Allas
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
Anti Allas, on behalf of the Social Democratic Party faction, submitted an interpellation concerning the revenue base of local governments and the equal accessibility of essential services. He asked the minister to clarify the impact of the so-called Robin Hood measure, which aimed to improve the financing of remote areas with older residents, in order to find solutions for the funding problems of local governments during the state budget proceedings.
Aseesimees Toomas Kivimägi
AI Summary
Deputy Speaker Toomas Kivimägi thanked the audience and subsequently gave the floor to the honorable Minister of Regional Affairs and Agriculture, Hendrik Johannes Terras, inviting him to approach the Riigikogu rostrum.
Aseesimees Toomas Kivimägi
AI Summary
Deputy Speaker Toomas Kivimägi thanked the audience and then gave the floor to the Honorable Minister of Regional Affairs and Agriculture, Hendrik Johannes Terras, asking him to step up to the Riigikogu rostrum.
Regionaal- ja põllumajandusminister Hendrik Johannes Terras
AI Summary
The Minister of Regional Affairs and Agriculture, Hendrik Johannes Terras, addressed the revenue base of local municipalities and its stability, emphasizing that fair and predictable funding is a prerequisite for quality public services in every corner of Estonia. He refuted the claims made by the City of Tartu regarding exaggerated losses resulting from the "Robin Hood" measure and the care reform, explaining that the goal of redistributing the revenue base is to reduce regional disparities, a move that benefits nearly 80% of local governments. As future steps, the speaker promised to increase the financial autonomy of local municipalities by integrating state subsidies into the permanent revenue base and by creating a legal framework for local benefit fees, thereby ensuring stronger and more sustainable local funding.
Regionaal- ja põllumajandusminister Hendrik Johannes Terras
AI Summary
The Minister of Regional Affairs and Agriculture, Hendrik Johannes Terras, responded to an interpellation concerning the revenue base of local governments and the "Robin Hood" solidarity mechanism, emphasizing the goal of ensuring stable and fair funding for all local governments (KOVs) to provide quality services. He refuted the claims made by the City of Tartu regarding the exaggerated negative impact of the reforms, confirming that the majority (80%) of local governments benefit from the mechanism, while the losses incurred by those who lose out are limited and compensated through a transition mechanism. Furthermore, he promised to increase the financial autonomy of local governments in the future by permanently integrating state subsidies into the revenue base and creating a legal framework for local charges.
Aseesimees Toomas Kivimägi
AI Summary
Deputy Speaker Toomas Kivimägi thanked the listeners, stressed the Riigikogu members’ wish to continue actively posing questions, and subsequently gave the floor to Jaak Aab.
Aseesimees Toomas Kivimägi
AI Summary
Deputy Speaker Toomas Kivimägi thanked those involved for the preceding discussion, highlighted the continued desire of Riigikogu members to contribute with questions, and then gave the floor to the next questioner, Jaak Aab.
AI Summary
Jaak Aab emphasizes the need to increase the financial autonomy of local governments, arguing that, in addition to boosting their own revenues, the earmarked funds currently held in the support fund should also be transferred to the revenue base. This is necessary because the revenue base for local governments has shrunk relative to GDP, and the current funding is inadequate for carrying out new responsibilities, such as crisis resilience and population protection.
AI Summary
Jaak Aab draws attention to the insufficient financial autonomy of local governments, emphasizing that although increasing their own revenues is important, the share of the revenue base in GDP has constantly decreased, and funds tied up in the support fund do not allow for the adequate financing of the crisis resilience and civil protection tasks required of cities and municipalities, which is a critical problem in the current security situation.
Aseesimees Toomas Kivimägi
AI Summary
Deputy Chairman Toomas Kivimägi concluded his address with a brief word of thanks.
Regionaal- ja põllumajandusminister Hendrik Johannes Terras
AI Summary
The Minister of Regional Affairs and Agriculture, Hendrik Johannes Terras, states that the allocation of tasks, revenues, and expenditures between local and central government is part of a broader political debate. He stresses that funding and accountability must align with the service provider, and points to the crucial role of local municipalities in enhancing crisis preparedness, such as addressing shortcomings in the creation of crisis communication systems.
Regionaal- ja põllumajandusminister Hendrik Johannes Terras
AI Summary
Minister of Regional Affairs and Agriculture Hendrik Johannes Terras notes that the distribution of tasks, costs, and revenues between the state and local governments is part of a broader political debate. He stresses that funding and responsibility must go hand in hand, and highlights the crucial role of local authorities in ensuring crisis resilience, particularly the need to establish functional crisis communication.
Aseesimees Toomas Kivimägi
AI Summary
Deputy Chairman Toomas Kivimägi gave the floor to Helmen Kütt, inviting her to the podium.
Helmen Kütt
Profiling Sotsiaaldemokraatliku Erakonna fraktsioonAI Summary
Helmen Kütt commends the Minister of Regional Affairs and Agriculture for the regional policy steps taken to support public transport. However, she simultaneously draws attention to the criticism from the agricultural sector (in the context of the Ekseko layoffs) regarding the response being too late and insufficient, questioning whether the minister can successfully and balancedly manage both areas of responsibility in their position.
Helmen Kütt
Profiling Sotsiaaldemokraatliku Erakonna fraktsioonAI Summary
Helmen Kütt commends the Minister of Regional Affairs and Agriculture for his regional policy steps (such as public transport subsidies), but simultaneously draws attention to the criticism coming from the agricultural sector (Ekseko redundancies), which suggests the response was too slow. She then questions whether the minister is capable of successfully managing the interconnected issues of these two portfolios.
Regionaal- ja põllumajandusminister Hendrik Johannes Terras
AI Summary
Minister of Regional Affairs and Agriculture Hendrik Johannes Terras views the crisis that has struck the pig farming sector (Ekseko layoffs) as a lesson regarding the dangers of excessive production concentration. He confirms that the recovery plan stipulates the establishment of smaller, dispersed farrowing units, but stresses that investments can only commence once the wild boar population is low enough to bring the disease prevalence close to zero, which requires years of cooperation and is the only responsible approach.
Regionaal- ja põllumajandusminister Hendrik Johannes Terras
AI Summary
The Minister of Regional Affairs and Agriculture, Hendrik Johannes Terras, acknowledged the negative impact of the Ekseko layoffs, noting that the crisis highlighted the danger of over-concentrating production. He stressed that restoring production potential in cooperation with the sector—by establishing more, but smaller, farrowing pig farms—is only possible if the wild boar population has been reduced and the disease background in the forest is near zero, because investing in a high-risk environment is not sensible.
Aseesimees Toomas Kivimägi
AI Summary
After a brief address, Deputy Speaker Toomas Kivimägi called upon Tiit Maran to give his speech or begin his presentation.
Tiit Maran
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
Tiit Maran acknowledges the minister's complex area of responsibility and requests clarification on how to implement the principle of financial autonomy in practice, citing extremely different municipalities such as Tallinn and Valga as examples, while also considering the complexity associated with crises.
Tiit Maran
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
Tiit Maran commends the minister for managing the complex regional sector, but wishes to receive a more detailed explanation regarding the implementation of financial autonomy, asking how this principle can be achieved and compared across very different local governments (such as Tallinn and Valga), while also taking into account the associated complexities and crises.
Regionaal- ja põllumajandusminister Hendrik Johannes Terras
AI Summary
The Minister of Regional Affairs and Agriculture, Hendrik Johannes Terras, emphasizes that increasing the financial autonomy of local governments requires growing the local revenue base, either through targeted central government funding or the capacity to implement local taxes. He also finds that, since the share of local government revenue in Estonia is small according to the OECD, it is essential to initiate a broad-based political debate regarding the fundamental re-evaluation of how state services are provided.
Regionaal- ja põllumajandusminister Hendrik Johannes Terras
AI Summary
The Minister of Regional Affairs and Agriculture, Hendrik Johannes Terras, finds that to increase the financial autonomy of local governments, it is essential to raise their local revenue base, either through earmarked state funds or local taxes. He emphasized that due to the low proportion assessed by the OECD, Estonia urgently needs a broad-based political debate on the fundamental reorganization of the provision of state services.
Aseesimees Toomas Kivimägi
AI Summary
Deputy Speaker Toomas Kivimägi gave the floor to Riina Sikkut, inviting her to the podium.
Riina Sikkut
Profiling Sotsiaaldemokraatliku Erakonna fraktsioonAI Summary
Riina Sikkut referred back to the previous discussion of the State Budget Act and asked the minister who had given approval to the draft legislation whether the proposed amendments—which concern the removal of ad-hoc grants from the support fund and the clarification of negotiation procedures—are merely administrative or if they have a real impact on the revenue base of local governments.
Riina Sikkut
Profiling Sotsiaaldemokraatliku Erakonna fraktsioonAI Summary
Riina Sikkut refers back to the previous debate on the State Budget Act and asks the Minister to clarify whether the amendments in the current draft bill—which concern the removal of case-specific grants from the support fund and the specification of budget negotiations—are merely administrative or if they have a real impact on the revenue base of local governments.
Regionaal- ja põllumajandusminister Hendrik Johannes Terras
AI Summary
Minister of Regional Affairs and Agriculture Hendrik Johannes Terras emphasizes that securing the revenue base of local governments (LGs) and increasing their autonomy crucially depends on directing the funding for state services straight into the LGs' revenue base, rather than through funds. Furthermore, they must be granted greater authority to impose local taxes, and the dialogue between the state and LGs regarding services and their equal financing must be improved.
Regionaal- ja põllumajandusminister Hendrik Johannes Terras
AI Summary
Minister of Regional Affairs and Agriculture Hendrik Johannes Terras believes that securing the revenue base for local municipalities requires two essential steps: ensuring that funding for state-transferred services flows directly into the local government (KOV) budget, bypassing unreliable funds; and increasing the autonomy of KOVs when it comes to implementing local taxes. He stresses the critical importance of negotiating both services and their funding between the state and the municipalities to guarantee equitable and predictable financing.
Aseesimees Toomas Kivimägi
AI Summary
Deputy Chairman Toomas Kivimägi gave the floor to Anti Allas, calling him to the podium.
Anti Allas
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
Anti Allas requests the Minister to specify the exact impact of the local government funding model, known as the "Robin Hood model," on city budgets over a four-year period, demanding a concrete figure (specifically, is the impact 14 million euros, as has been claimed) and stressing that the financing of the care reform is not the subject matter of this particular inquiry.
Anti Allas
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
Anti Allas is asking the minister to clarify the actual financial impact of the so-called Robin Hood funding model on city budgets over a four-year period, stressing that the previous response mistakenly addressed the social care reform and failed to answer the question of whether the damage reaches the 14 million euros claimed by the Deputy Mayor of Tartu.
Regionaal- ja põllumajandusminister Hendrik Johannes Terras
AI Summary
Minister of Regional Affairs and Agriculture Hendrik Johannes Terras politely requested clarification regarding the previously mentioned time period, specifically asking whether it concerned a four-year period.
Aseesimees Toomas Kivimägi
AI Summary
Deputy Chairman Toomas Kivimägi asked for the microphone to be briefly returned to Anti Allas.
Aseesimees Toomas Kivimägi
AI Summary
Vice-Chairman Toomas Kivimägi asked for the microphone to be returned to Anti Allas briefly.
Anti Allas
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
Anti Allas raised a question concerning the city budget that encompassed the current and three subsequent fiscal years.
Anti Allas
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
Anti Allas defined the topic of the discussion, which was the city budget for the current year and the next three years.
Regionaal- ja põllumajandusminister Hendrik Johannes Terras
AI Summary
Minister of Regional Affairs and Agriculture Hendrik Johannes Terras's address was extremely brief, focusing solely on the four-year period.
Anti Allas
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
Anti Allas clarifies that the four-year period under discussion begins in 2025 and continues for three more years after that.
Anti Allas
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
Anti Allas outlined the temporal framework, which initially involves a four-year conceptualization period. He then clarified that the actual activity starts in 2025 and will run for an additional three years after that.
Regionaal- ja põllumajandusminister Hendrik Johannes Terras
AI Summary
Minister of Regional Affairs and Agriculture Hendrik Johannes Terras presented a detailed calculation of the projected sums for the years 2025–2028, which total 8.7 million, while confirming that the final figure will not drop below 14 million.
Regionaal- ja põllumajandusminister Hendrik Johannes Terras
AI Summary
Minister of Regional Affairs and Agriculture Hendrik Johannes Terras presented a detailed calculation of the expected costs for the years 2025–2028, which total 8.7 million, concluding that this sum remains significantly below the 14 million mark that was evidently expected or projected.
Aseesimees Toomas Kivimägi
AI Summary
Vice-Chairman Toomas Kivimägi gave the floor to Aivar Koka.
Aivar Kokk
Profiling Isamaa fraktsioonAI Summary
Aivar Kokk sharply criticizes the government's inability to manage the budget and demands a fundamental change to Estonia's financing models. He emphasizes the need to grant local governments (KOV) greater financial autonomy and a significantly higher budget percentage (referencing an earlier proposal to raise this above 12%), arguing that the current paltry subsidies will not save the situation and prevent local governments from managing independently.
Aivar Kokk
Profiling Isamaa fraktsioonAI Summary
Aivar Kokk emphasizes the necessity of changing the funding models for local governments in Estonia, citing the US as an example, where the majority of tax revenue remains with local authorities. He sharply criticizes the government's inability to manage the budget and the paltry nature of current subsidies, demanding a substantial increase in the percentage allocated to local governments.
Aseesimees Toomas Kivimägi
AI Summary
Deputy Chairman Toomas Kivimägi confined his presentation to a brief and specific expression of thanks.
Regionaal- ja põllumajandusminister Hendrik Johannes Terras
AI Summary
Regional and Agriculture Minister Hendrik Johannes Terras stresses the necessity of finally holding the long-postponed debate in Estonia concerning the fairer distribution of revenues and services among local governments. He points to Madis Kallas's Robin Hood measure, which boosts the revenue base of weaker municipalities, as a positive example, and argues that although the discussion surrounding greater autonomy and improving the proportion of funding is vitally important, this subject tends to be avoided far too often.
Regionaal- ja põllumajandusminister Hendrik Johannes Terras
AI Summary
Regional Affairs and Agriculture Minister Hendrik Johannes Terras stresses the importance of the long-overdue debate concerning the distribution of revenues and services among local municipalities. He highlights the positive effect of Madis Kallas's "Robin Hood measure" in boosting the revenue base, but notes that while greater local autonomy is necessary, implementing it in an American-style manner is administratively complex given Estonia's small size. He concludes that this crucial discussion is often sidestepped.
Aseesimees Toomas Kivimägi
AI Summary
Deputy Speaker Toomas Kivimägi concluded the questioning, thanked the participant, and then opened the debate, first inviting Anti Allas to the podium, who most likely represents the interpellators.
Aseesimees Toomas Kivimägi
AI Summary
Deputy Speaker Toomas Kivimägi thanked the previous speaker, closed the round of questions, and opened the debate, inviting Anti Allas to speak first on behalf of the interpellators.
Anti Allas
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
Anti Allas, representing the stance of the Social Democrats, emphasizes the responsibility of the Estonian state as a whole to guarantee equal services for all local governments, comparing this to a normal family. He defends the "Robin Hood" measure as a necessary step to alleviate the financial situation of poorer regions in a situation where securing additional funding for the equalization fund is difficult, while simultaneously criticizing the lack of meaningful content in the concept of financial autonomy.
Anti Allas
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
Drawing on his experience as a local government leader in Southern Estonia, Anti Allas stresses the position of the Social Democratic Party faction: the Estonian state must ensure equal quality and accessibility of services across all regions. He compares the state to a functioning family where benefits are distributed equally among all members. Given that finding additional funds for the equalization fund or implementing tax hikes are not feasible options, he views the "Robin Hood" measure as a necessary step to alleviate the financial strain on poorer local governments. However, he simultaneously calls for the substance of financial autonomy to be clearly defined.
Aseesimees Toomas Kivimägi
AI Summary
Deputy Speaker Toomas Kivimägi confined himself to a brief affirmative reply, confirming that three minutes were allotted for speaking time.
Anti Allas
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
Anti Allas emphasizes that financing Estonian local governments using a single method is impossible due to their regional differences, as raising the income tax percentage disproportionately benefits only large centers. Therefore, special solutions should be found for each region, and the equalization fund should be prioritized. He concludes by criticizing politicians who speak of financial autonomy but fail to take substantive action to improve the situation of local governments.
Anti Allas
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
Anti Allas emphasizes that ensuring the financial autonomy of Estonian local governments is not possible by funding everyone equally, because regional needs are too diverse. Therefore, raising the income tax percentage, which disproportionately benefits large cities, should not be preferred. Instead, specific solutions must be found and money must be directed to the equalization fund, as he calls on politicians to stop the empty words and start taking action.
Aseesimees Toomas Kivimägi
AI Summary
Deputy Chairman Toomas Kivimägi concluded the previous segment, expressed his gratitude, and then gave the floor to Aivar Kokk.
Aivar Kokk
Profiling Isamaa fraktsioonAI Summary
Aivar Kokk emphasizes that the success of local governments depends primarily on management, not so much on funding, citing the large investments made by the Põltsamaa municipality as a positive example. He also sharply criticizes the lack of transparency in the state budget and the redistribution of small sums. He demands a fundamental debate before the Riigikogu elections regarding which services the state should cover 100% using taxpayer money and which ones citizens should partially pay for, in order to support people's self-sufficiency.
Aivar Kokk
Profiling Isamaa fraktsioonAI Summary
Aivar Kokk, during the discussion on local government funding, stressed the importance of quality management, highlighting the success story of Põltsamaa municipality in undertaking major investments while maintaining a low debt burden. At the same time, he criticized the state's attempts to distribute trivial sums (17 million) to local governments, demanding that next year's debate should instead focus on which services the state ought to provide entirely (100%) using taxpayer money, and for which services citizens should partially contribute.
Aseesimees Toomas Kivimägi
AI Summary
Vice-Speaker Toomas Kivimägi concisely and powerfully expressed his complete agreement.
Aivar Kokk
Profiling Isamaa fraktsioonAI Summary
Aivar Kokk emphasizes the need to establish a clear revenue base and control mechanisms for local governments to prevent the unwise investments that primarily resulted from the mergers eight years ago and have driven a third of the municipalities into a critical debt burden. He also expresses doubt that the Riigikogu will be able to fulfill its future promises, given the financial mess that has developed over the last four years, and wishes the minister the courage to make decisions.
Aivar Kokk
Profiling Isamaa fraktsioonAI Summary
Aivar Kokk emphasizes that the revenue base for local governments requires clear definition and control, as many municipalities have critically over-borrowed due to ill-conceived investments, which has pushed the country to the brink of financial collapse. He also expresses skepticism regarding future political promises, and wishes the new minister the courage to make the necessary, yet difficult decisions required to improve the situation.
Aseesimees Toomas Kivimägi
AI Summary
Deputy Speaker Toomas Kivimägi concluded the handling of the fifth item on the agenda and then made a witty remark to his colleagues that, since the first applications for the position of County Governor have already been submitted, they need to hurry up with their work.
Aseesimees Toomas Kivimägi
AI Summary
Deputy Speaker Toomas Kivimägi announced the conclusion of the debates and the handling of the fifth item on the agenda, subsequently adding a humorous remark about the need to speed things up, since the first applications for the position of County Governor have reportedly already come in.