The Law on the Equalization of Local Government Finances, in force since 2015, stipulates, in simple terms, that some municipalities pay into a fund and others receive from it, based on the socioeconomic situation of the municipality and its needs, in order to diminish inequality. The principle of financial equalization is to provide additional funding to municipalities that do not cope with basic functions.
Most, or 2/3 of the amount will come from Rīga, with EUR 133.35 million for this purpose. The State budget grant to the fund will amount to EUR 35.9 million.
However, Ratnieks emphasizes that every year the state's transferred liabilities on the shoulders of local governments are only increasing.
“Therefore, all local governments in the country are in an unenviable situation in order to fulfill the functions assigned to them and to think about the development of infrastructure and new projects expected of them by residents and businesses,” said Riga Vice-Mayor.
“It is difficult to explain to our residents that we lack the funds for basic needs as a tenth is given away in financial equalization to other local governments. At the same time, residents cite municipalities that receive a grant from us as successful examples of development, with orderly patios and roads, new buildings and support for entrepreneurs,” Ratnieks said.
Besides nine Rīga and surrounding municipalities, only Jūrmala is contributing to the fund – next year, in the amount of 10.6 million. All other municipalities are among the beneficiaries.
The largest contributions of Riga Metropolitan municipalities to the local government equalization fund will be made by:
- Rīga – EUR 133.3 million;
- Mārupe municipality – EUR 16.2 million;
- Ropaži municipality – EUR 9.27 million;
- Ādaži municipality – EUR 6.4 million;
- Ķekava municipality – EUR 6.2 million;
- Salaspils municipality – EUR 1.18 million;
- Saulkrasti municipality – EUR 1.3 million ;
- Olaine municipality – EUR 665.5 thousand;
- Sigulda municipality – EUR 120 thousand.
