Riga accounts for almost half of the country’s economy, and during this pandemic, Latvijas Radio especially appreciates how Riga’s key earners plan to maintain and grow budget revenues, as well as further distribute Riga’s approximately one billion euro budget.
15 lists will be distributed as Riga billionEdgars Kupčs
–
–
Addressing the 15 lists submitted for the extraordinary elections as priorities for next year’s budget, Latvian Radio parties were first told some important facts: Riga’s budget expenditures have reached a historic threshold of over one billion euros this year, Riga has more than six hundred thousand inhabitants salaries, entrepreneurs and various state institutions are concentrated in Riga. However, with the Covid-19 crisis, Riga has also suffered the most from job losses, the biggest problems for entrepreneurs have arisen, and the previously optimistic budget revenues are also declining due to the pandemic.
Nevertheless, Baiba Brusbārde, an economist at the Bank of Latvia, estimates that from a fiscal point of view, the Riga wallet will be handed over to the new government in a fairly good condition.
“In recent years, the balance of funds has been growing. This means that savings are increasing and Riga has a safety margin in case of need. Second, as can be seen looking ahead, the ratio of long-term borrowings to planned budget revenues will decrease. “As a result of sustainable management and thinking, Riga increases the opportunity to invest in capital expenditures, for example, to make the city more attractive to investors and people who are able to add value to the economy,” explains Brusbārde.
Politicians’ budgetary priorities, in turn, show whether spending is more on social benefits or, simply put, on spending money, or on increasing the capital’s competitiveness. “If we think about attracting investors, then Riga still has room to grow compared to what it could and would like to be,” the economist believes.
But what does Riga want to see and promises to make in the coming years? For all 15 lists, Latvijas Radio asked how it will promote the development of Riga as the capital, how will it create a living and working-friendly urban environment, how will it help overcome the consequences of the Covid-19 crisis and at the same time create new opportunities for Riga to become one of the most competitive cities in the Baltic Sea region?
In order to acquaint the voters more thoroughly with the economic vision of the candidates, the Latvian Radio parties were asked to do their homework. To answer questions about how it is planned to keep Riga’s revenues at least at the current level and what is the budget distribution proposed by the party for the next year. In order to prepare the answers more clearly, we created a table, where the distribution of Riga’s spending of one billion this year by sectors is shown. The parties had to fill in the adjacent box with their money distribution offer.
For several parties, the challenge of dividing the Riga budget into 12 expenditure items according to a given sample proved to be unfeasible.
The Alternative Party and the Action Party did not even try to cling to their homework. The Greens and Farmers Union completely avoided the figures when allocating the budget, instead sending party promises. The joint list of the National Association and the Association of Regions did not fill in the table, but added that the amount and structure of the budget next year will be similar to this year’s expenditure items.
KPV LV did not bother to fill in the table either, but openly stated that it does not expect the budget to increase and even maintain it at the current level, therefore the current expenditures will be reviewed. “Sobeža”, which has been creating the Riga budget for ten years, did not want to fill in the questionnaire, but stressed in the e-mail that all challenges will be overcome in the same way as Riga once overcame the economic crisis. The “New Harmony” table was filled in, but next year’s expenses were copied to next year’s column, only 64 million local governments will not be paid into the equalization fund, because after the territorial reform, all councils must be self-sufficient. The Latvian Russian Union apologized for not filling in the table with the phrase that it cannot risk predictions. The party “United to Latvia” mentioned in the columns of this year’s table for several industries that an increase was needed, but did not name its figures. The Centre’s party did not undertake the distribution of the budget at its own discretion.
Thus, ten of the 15 lists, including two with long experience in the Riga City Council, did not even provisionally want to allocate the billion-euro expenditures of the Riga budget.
There are many beautiful promises in party programs and speeches by mayoral candidates, but there is a lack of understanding of whether and how they can be implemented. This is the conclusion of Maris Jonovs, the leader of the organization “City for People”, who has carefully supervised the work of the Riga City Council before and now devotes a lot of time to negotiations with potential mayors.
“A lot of beautiful words. By asking questions, you can see that their comprehension is measured by many [amata] candidates are missing. Where should we invest so that Riga really gets to the beautiful future that they themselves promise, “says Jonovs.
One of the bidders for a better future is the list of the National Union “Justice”, which also carefully filled in next year’s budget columns. This could be one of the most ambitious parties, as it promises a budget increase of almost 300 million next year, despite the pandemic. “Justice” plans to collect 180 million in the new – foreigners – tax, but another hundred million profit will be generated by the Rīdzinieku bank promised by this party. However, the party will divide most of the seemingly utopian income into benefits and expenses for the entertainment of Rigans.
The New Conservative Party has also carefully approached the distribution of the budget. The Conservatives are promising not only to keep the budget at the current billion despite the pandemic, but to get an additional € 10 million in contributions from port activities and € 5 million from gambling levies. The Conservatives will spend most of the extra money and savings on benefits, reducing kindergarten queues and raising teachers’ salaries. In addition, conservatives are planning a deficit of almost one hundred million euros or a life on debt.
The New Unity also thinks that the capital’s revenue will grow next year, by 50 million euros. The New Unity also offers a budget deficit of 80 million euros. Arranging the farms of Rīgas satiksme and other city council companies, saving at least 75 million euros, which in turn can be dedicated to the education sector, unprecedented Riga infrastructure `rescue fund, as well as seven million reserves to promptly solve problems possibly caused by Covid-19.
More pragmatically, Riga has distributed a billion “For Development / About!” and the “Progressive” common list. The association sees that next year’s budget will be as much as five million euros less than this year, as the pandemic will reduce personal income tax revenues. However, budget expenditures “For Development / For!” and “Progressive” promise similar to this year, and most industries are expecting an increase in wages, roads and housing renovation. All this will be possible, because the expenses for “Rīgas satiksme” and the civil service will decrease.
Finally, “It is an honor to serve Riga”, which formed this year’s budget, admits that living in the shadow of Covid-19 makes it difficult to make future forecasts, as Riga’s wallet is mainly made up of personal income tax. However, the party plans to increase spending modestly by five million euros. There will be additional salaries and benefits for teachers, which must be increased according to this year’s judgments of the Constitutional Court. 20 million euros will be taken from Rīgas satiksme, but 29 million will be given to streets and bridges. The table “Honor to serve Riga” also shows the commitment of 14 million euros for the continuation of the works of Mežaparks stage.
From the 15 list offers in total, it can be concluded that the parties are well acquainted with the areas that are of interest to the majority of Rigans or, more simply, the sectors in which they can get votes with promises.
Growing benefits and discounts, salaries for teachers, reduction of queues in kindergartens, improvement of streets and apartment buildings, audit of municipal companies and saving money. However, there is no detailed approach to party development for business development so that Riga’s economy can grow in the future. However, entrepreneurs hope at least for the beginning of the dialogue, says Katrīna Zariņa, a member of the board of the Latvian Chamber of Commerce and Industry.
“The critical question that is for us, but which does not appear so often in party programs, is the involvement of the municipality in business. Our big question and place for discussion has always been whether the municipality really has to do business. “The first job that should be done – should sit together with the organizations representing entrepreneurs at the same table. Dialogue has been a problem so far,” admits Zariņa.
And a dialogue with entrepreneurs in Riga will be necessary, because without new investments it will be difficult for the capital to maintain its current revenues. Mārtiņš Āboliņš, an economist at Citadele Bank, explains that the latest forecasts of the Ministry of Finance promise to return this year’s revenues to local governments only in two or three years.
“This means that if the desire to do something new, to do something extra, such as construction, it will have to find funds on the existing farm. The main challenge is probably to put the existing farm in order. Also in” Rīgas satiksme “from Covid-19 economic shock This further increases the pressure on the company, which has been a major recipient of grants from the Riga City Council in recent years. Arranging the financial economy will be a very big challenge, “believes.
Although Riga could set an example by living on debt to other municipalities, as only over ten of the allowed 20% of the annual budget is spent on loan repayment,
economist Āboliņš questions the possibility of implementing the plans of some parties to significantly increase the budget deficit, because the state will not allow the growth of total liabilities.
If the arrangement of the farm does not go so well, Riga may even have to reconsider some discounts or benefits. Expectations can be placed on the European Union’s support for rescuing national economies.
Brusbārde, an economist at the Bank of Latvia, is not so skeptical about the candidates’ generous offers of social support.
“From an economic point of view, Riga has opportunities and options to offer economic growth to the city so that it would be interesting for both entrepreneurs and people. I think we still have a lot to grow in the direction of a modern city,” says Brusbārde.
At the moment, however, it is difficult to predict how much next year’s budget will be formed by the administration and will again be considered quite technical, and how much will involve politicians who have yet to form a coalition after the elections. Economists remind that the budget is first prepared by the state, and Riga still has time until the end of the year and the beginning of next.
–
