The rapid rise of municipal budget surplus can be explained with growing income and lower expenditures, including reduced investments to projects financed by the European Union, as reported by Finance Ministry.
The largest budget surplus was noted in Riga’s municipal budget – EUR 25.1 million, Daugavpils city budget – EUR 5.7 million and Jurmala city budget – EUR 5.4 million. A small budget deficit was noted in Jaunpiebalga municipal budget.
Total municipal budget revenue in Q1 2016 was EUR 554.5 million, which is EUR 21 million or 3.9% larger in comparison with Q1 2015. Tax revenue formed 66.4% of total revenue. Tax revenue has grown by 7.4% in comparison with Q1 2015.
Revenue from PIT was EUR 19.4 million or 7.5% larger in comparison with the same period of last year. Rise of PIT revenue can be explained with the growth of wages and increase of the number of employed people.
Revenue from Real Estate Tax increased by EUR 6.6 million or 8.3% in comparison with Q1 of 2015.
The second largest revenue position (25%) was made up of transfers, mainly from the state budget. Compared with Q1 2015, the volume of transfers has declined by 5.3%, which can be explained with the reduction of funding to projects financed by EU funds.
The reduction of finances provided to EU fund projects was the main factor for the reduction of municipal budgets’ expenditures by EUR 24.1 million or 5.1% in comparison with Q1 2015. Total municipal expenditures reached EUR 443.8 million in Q1 2016.
Compared with the first quarter of last year, maintenance costs have risen by 3.0%, including for expenditures for wages (3.5%), goods and services (1.9%) and expenditures for subsidies and grants (14.2%). Grants and subsidies in relation to Rīgas Satiksme have increased by EUR 3.7 million.
Capital expenditures have declined by half (52.1%) in comparison with Q1 of the previous period. Expenditures have declined for basic functions and EU fund projects, which can be explained with the end of the previous EU project planning period. The total volume of loans provided to municipalities has declined by EUR 7.5 million in Q1 2015. This is mostly related to the reduction of permits in the EU and other co-financed projects.
The volume of permits issued for basic functions has increased. The largest number of permits issued in 2016 was provided to education institution projects, state sports infrastructure development projects, road and other investment projects.
Municipal budget balance at the end of the year will depend on the completion of capital expenditures. A more active realization of EU funds is predicted for the second half of the year. As a result, budget deficit is expected to emerge at the end of the year, as noted by the ministry.