Local Government Funding Reform
Session: 15th Estonian Parliament, third sitting, information briefing
Date: 2024-03-13 15:24
Participating Politicians:
Total Speeches: 12
Membership: 15
Agenda Duration: 15m
AI Summaries: 12/12 Speeches (100.0%)
Analysis: Structured Analysis
Politicians Speaking Time
Politicians
Analysis
Summary
The discussion covered the local government (KOV) financing reform initiated by Regional Minister Madis Kallas. Riigikogu member Vadim Belobrovtsev criticized the reform, arguing that it penalizes more successful local governments by reducing their revenue through changes in the calculation of individual income tax, and introduces progressive taxation at the local government level. He referred to the negative stance of the Association of Estonian Cities and Municipalities (ELVL) and asked the Prime Minister whether she considered such a step fair. Prime Minister Kaja Kallas acknowledged that the goal of the reform is to balance the revenue base of local governments to mitigate the effects of urban sprawl and regional inequality, but stressed that it is a comprehensive package being discussed in a working group, which must take into account the investment needs of local governments with many children. Kallas refuted the claim that the system is temporary and emphasized that there is no spare money in the state budget that could simply be given additionally to local governments (KOVs). Rene Kokk highlighted the difficult financial situation of local governments (KOVs), which forces them to close schools and kindergartens, and criticized the state for assigning additional tasks to local authorities (e.g., teacher salary increases, costs for Ukrainian war refugees) without sufficient financial resources. The Prime Minister emphasized that organizing education is an autonomous task of the local government, and the state has increased funding, but additional money requires a greater contribution from taxpayers.
Decisions Made 1
Decisions were not made
Most Active Speaker
Vadim Belobrovtsev was an active questioner who posed two critical questions, focusing on the unfairness of the reform and its potential temporary nature. His position is oppositional (other).
Esimees Lauri Hussar
AI Summary
Chairman Lauri Hussar now announces the sixth question, addressed to Prime Minister Kaja Kallas. The question will be presented by Riigikogu member Vadim Belobrovtsev, and the topic concerns the reform of local government financing.
Vadim Belobrovtsev
Profiling Eesti Keskerakonna fraktsioonAI Summary
Vadim Belobrovtsev has criticized Madis Kallas’s plan, which aims to reduce state funding for better-performing local governments and alter the calculation of income tax on state pensions. Belobrovtsev views this measure as a progressive tax—a punishment for the most diligent—and simultaneously submitted the strong negative opinion of the Association of Estonian Cities and Municipalities. Furthermore, he questions whether this is the correct step, especially considering that the Reform Party holds power in the local governments affiliated with the coalition.
Peaminister Kaja Kallas
AI Summary
Prime Minister Kaja Kallas stated that the government is working on a comprehensive package designed to equalize the revenue base of local municipalities, reduce regional disparities and the negative impacts stemming from the Tallinn area, ensure investments in schools and kindergartens, increase financial autonomy, and create incentives for attracting new businesses.
Esimees Lauri Hussar
AI Summary
Chairman Lauri Hussar thanked [the previous speaker] and asked Vadim Belobrovtsev to pose a clarifying question.
Vadim Belobrovtsev
Profiling Eesti Keskerakonna fraktsioonAI Summary
Vadim Belobrovtsev said that he supports a progressive income tax and is prepared to pay more than people earning lower or average wages. He also criticized Madis Kallas's temporary regional reform, during which money would be taken from poorer local governments, and which he wouldn't believe would ever be reversed, noting at the same time that VAT has already increased and temporary promises are not trustworthy.
Peaminister Kaja Kallas
AI Summary
Prime Minister Kaja Kallas emphasizes that the goal is to address urban sprawl and regional inequality, assist poorer municipalities, and boost the financial autonomy of local governments. However, there is no additional funding available in the state budget, and the reform must be permanent, not temporary. The final solution will be the result of negotiations conducted by the working group.
Esimees Lauri Hussar
AI Summary
The Chairman thanked [the previous speaker] and asked Rene Kokk to present an additional question.
AI Summary
Rene Kokk notes that local governments are in a difficult position due to energy costs, tax increases, and new obligations, and although they are housing arrivals from Ukraine, the additional costs are borne by the local governments. He asks whether the state plans to give local governments additional money or continue increasing burdens without providing the necessary resources.
Peaminister Kaja Kallas
AI Summary
Prime Minister Kaja Kallas confirmed that the financing of local governments and the autonomy of education have been increased, and a funding model for keeping small schools close to home has been established. However, there is no additional money in the state budget, and therefore, taxes must be raised and a greater contribution requested from the taxpayer to finance education and security.
Esimees Lauri Hussar
AI Summary
Chairman Lauri Hussar thanked the Prime Minister, concluded the handling of the sixth question, and before discussing the seventh question, raised a procedural question regarding the conduct of the sitting and called on Rene Kokk.
Esimees Lauri Hussar
AI Summary
Chairman Hussar says that he cannot currently deem this a procedural matter, and that it has also not been worded as a procedural matter.