Minister for Regional Affairs and the Local Government Associations Cooperation Assembly sign final protocol of budget negotiations

Press release no. 147

Minister for Regional Affairs and head of the inter-ministerial committee of the Government of the Republic Jaan Õunapuu, heads of the Local Government Associations Cooperation Assembly delegation, Chairman of the Association of Estonian Cities Margus Lepik and Chairman of the Association of Municipalities of Estonia Kurmet Müürsepp have today signed the final protocol of negotiations on the budgets for local governments for 2007. "I am very happy that, in spite of the stressful negotiations, we have been able to reach an agreement with local government associations that will form the basis for growth in next year's local government budget," said Minister Õunapuu, and added that increasing the resources to be allocated to local governments will create better opportunities to resolve town and municipal development issues.

The final protocol that has been signed today sets out agreements which will see a budgetary increase for local governments in 2007 of 2.8 billion kroons - representing 25.9% growth in the revenue base. Local government revenue will increase from 17 billion kroons in 2006 to 19.8 million kroons. The local government compensatory fund will increase in 2007 by 299 million kroons and the income tax revenue to be received by local governments will grow from 11.8% to 11.9%.

15% of the total amount provided for the funding of roadwork in the national budget will be allocated in 2007 to the upkeep of local roads. The funds for local roads will grow in total from 265 million kroons to 429 million kroons. The increase in teachers' salary funds will be 329 million kroons, 15% more than in 2006.

"The growth in the budget for local governments in 2007 will be the biggest ever," explained Minister Õunapuu. "The budget we have agreed on with local governments will help to more effectively cover our obligatory contribution to the European Union Structural Funds."

The final protocol of the local government budget negotiations will be presented to the Riigikogu as part of the draft national budget.