Four municipalities in Finland have landed on the Finnish state's crisis financial management list, according to a release issued by the Ministry of Finance on Friday. The municipalities are Vehmaa in Southwestern Finland, Kyyjärvi in Central Finland, Honkajoki in the Satakunta region, and Rantasalmi in the Lake Saimaa region.
One of the four municipalities targeted by the state, Vehmaa was reportedly 1.5 million euros in the red for 2018. Earlier this spring Vehmaa launched a savings programme in an effort to avoid ending up on the financial assessment procedure list.
According to the Ministry of Finance, the assessment procedure begins if a local government's economic performance has been flailing for more than two years in a row and it lags financially behind other municipalities in the country.
Rising health care costs cut into budgets
Rising social and health care expenditures are contributing to the growing costs incurred by municipalities, says the ministry, which published year-end financial statements for 2018 for Finland's municipalities on 31 May.
The Ministry said that expenses have rapidly grown owing to increased social and health care spending. As a result of increased expenditures, reduced taxes, and growing investments, cash flow for local government operations and investments declined significantly during 2018.
At the same time, loans by municipal groups grew by approximately 1.34 billion euros, bringing the total amount of municipal loans to nearly 36 billion euros during 2018.
