Vantaa’s financial statement shows a surplus of €47.7 million – a healthy economy will promote urban development
The finances of the City of Vantaa are in surplus, even though the development and views of the Finnish economy weakened considerably during 2023. Vantaa has made significant investments and is amortizing its loans over the long term.
Vantaa`s economy on a solid ground – strong growth expected to continue
The city’s balance sheet has grown stronger, and the level of indebtedness is lower than for more than a decade. In 2023, the program to balance productivity and growth was continued. In the last eight years, Vantaa has been able to amortize its long-term loans by more than €300 million, and the level of debt per capita is at the level of the national average.
During 2023, Vantaa’s population grew more than the year before: the increase was approximately 4,600 people, due especially to immigration. Internal migration was still negative for Vantaa.
Vantaa will continue its growth investments in 2024, as the building projects of the popular recreational area of Kuusijärvi and the long-expected Elmo swimming hall begin. The building of the Vantaa Light Rail will start once the state-funding decision has been confirmed. The strong growth of Vantaa is predicted to continue, says Mayor Pekka Timonen.
The city strategy The Vantaa of innovations 2022–2025 has been continued in the city and its different sectors during the term of the council. The qualitative mid-term review of the strategy was performed during 2023, some key actions were identified, and they must be carried out at the end of the strategy period. The 2020 master plan entered into force at the beginning of 2023. In 2023, the city council decided to build the first light rail line in Vantaa, and the project plan was approved. The decision is conditional and requires commitment from the government to the costs of the building project as a part of the MAL contract, which is under preparation. In 2023, Vantaa also prepared itself for the TE2024 reform, according to which employment and vitality services will be permanently managed by municipalities. This reform will enter into force at the beginning of 2025.
The weakening of Finland's national economy and the wellbeing services counties reform had a big impact on Vantaa’s economy
In 2023, Finland went into recession. Inflation was very high at the beginning of the year and led to higher interest rates, and, consequently, had an impact on the development of the economy.
The changed economic situation has especially impacted on the building industry, as well as the purchasing power of consumers. About 3,200 new residences were built in Vantaa, which was about the same number as the year before. The number of dwellings started was almost 70 percent lower than the year before, which means that the number of new dwellings will be very low for the next couple of years. Income from land sales and the sale of real estate and homes developed poorly due to the uncertainty in the markets.
The recession has also had a negative impact on employment. The number of unemployed job seekers in December 2023 was 37,200 more than a year before. In Vantaa, unemployment took a negative turn at the end of the year and was 2.3 percent higher than the year before.
The general economic situation is expected to take a positive turn at the end of 2024. Inflation has already fallen, and interest rates are also expected to decline in 2024. For Vantaa, it would be extremely important to get residential construction back to where it was, which would be good for both employment and the city’s economy.
2023 was the first year after the wellbeing services counties reform, and this had a huge impact on municipal economies, which was seen in cuts to tax receipts, central government transfers, operating profits and operating costs. In the reform, tasks previously carried out by municipalities were transferred to the wellbeing services counties, and at the same time municipal tax rates, corporate tax, and central government transfers were cut. In Vantaa, tax revenue dropped by 47 percent from the year before.
Vantaa’s financial statements for 2023 are clearly in surplus because of non-recurring items, but the situation deteriorated towards the end of the year. The Finnish economy is in recession, and the future of municipal economies is grim, but it is important to look past the economic cycles to the future and to developing the vitality of the city in long term, says Timonen.
Both municipal and corporate taxes in 2023 were impacted by tax tails. This means that some of the municipal taxes were still remitted to the municipalities at the old 2022 municipal tax rates and corporation taxes at the old municipal apportionment rates. The total of municipal taxes and the corporate taxes were exceptional in 2023, because there was a one-off tax tail of about €59 million. In the future, these tax tails will disappear.
2023 figures in brief
- The surplus for the fiscal year was €47.7 million, which is more than €32.6 million more than last year.
- Net income for the period was €50.1 million.
- Operating profit was €158.6 million.
- Operation costs were €832.7 million, the largest cost items of which were human resources costs and the purchases of services.
- Tax revenues were €638.7 million, and central government transfers €179.7 million.
- The initial tax revenue estimate in the budget was exceeded by EUR 29 million.
- Gross investment costs were €166.9 million, and the self-financing share of investments was €162.4 million.
