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: 36
Membership: 15
Agenda Duration: 42m
AI Summaries: 36/36 Speeches (100.0%)
Analysis: Structured Analysis
Politicians Speaking Time
Politicians
Analysis
Summary
The fifth item on the Riigikogu’s agenda concerned the inquiry submitted to the Minister of Regional Affairs and Agriculture, Hendrik Johannes Terras, by Social Democratic Party faction members Anti Allas, Reili Rand, and Jaak Aab regarding the state of the revenue base for local authorities (LAs). Speaking on behalf of the petitioners, Anti Allas emphasized the need to ensure equal and accessible public services in all regions of Estonia, regardless of the local authority's financial capacity. He asked the Minister to clarify the situation regarding LA funding and the effects of the so-called Robin Hood measure, especially in connection with the processing of next year's state budget.
Minister Terras responded to the inquiry, confirming that the financial capacity of LAs is directly linked to the quality of everyday services. He refuted the claim by Tartu Deputy Mayor Meelis Leidt that the Robin Hood measure and the care reform would take 14 million euros from Tartu over three years, estimating the total impact of the Robin Hood measure over four years to be approximately 8.7 million euros. The Minister noted that nearly 80% of local authorities benefit from the reform, while the negative impact affects only one-fifth of local authorities, mainly in Harju and Tartu counties. Terras highlighted the low financial autonomy of LAs as the biggest structural problem (only 2.3% of revenues originate from local taxes). In future plans, he foresees incorporating state subsidies (e.g., subsidies for schools and roads) into the permanent revenue base of LAs, creating new local fees (e.g., a local benefit fee for solar parks), and gradually implementing the Robin Hood mechanism until 2036. In the subsequent debate, Aivar Kokk (Isamaa) criticized the limited impact of the Robin Hood measure and emphasized the need for fundamental changes to the funding models, while Anti Allas stressed the importance of increasing the equalization fund to help poorer local authorities.
Decisions Made 1
Decisions were not made
Most Active Speaker
The most active speaker was the questioner, Anti Allas (Social Democratic Party), who introduced the interpellation, posed a clarifying question to the minister, and delivered the final remarks, stressing the necessity of ensuring equal services across all regions of Estonia.
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.
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.
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.
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.
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 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.
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 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, 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.
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.
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
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.
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 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.
Aseesimees Toomas Kivimägi
AI Summary
Vice-Chairman Toomas Kivimägi gave the floor to Aivar Koka.
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.
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 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.
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.
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, 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.
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.