Corona cost municipalities NOK 14 billion – E24

– There is no doubt that the corona pandemic has had significant economic consequences for the municipal sector. The report we have received today gives a good picture of how the sector as a whole has been affected by the crown crisis, says Local Government Minister Nikolai Astrup (H).

Earlier this year, the government established the task force to systematically review how municipal revenues and expenditures have been affected by the corona pandemic.

This year, municipalities will have lost expenses and revenue totaling NOK 10 billion, while county municipalities will lose around NOK 4 billion, according to the interim report.

Parental payment and public transport

Among other things, the municipality lost income from parental payments when schools and kindergartens closed. Most of the county municipalities’ losses are lower revenue from tickets on public transportation.

Furthermore, the sector is expected to receive less tax revenue than expected before the pandemic occurred. At the same time, the growth of prices and wages is lower than projected, and the municipal sector has also seen its employer contribution reduced this fall.

The government will use the report as the basis for the additional allocation to the municipal sector, or the additional number to the state budget, to be made in November.

– Demand to find adequate compensation

Several packages of measures for municipalities have already been presented and, so far, the sector has received more than NOK 20 billion. In general, municipalities are compensated for additional expenses and lost revenue, but the picture may look different at the local level, said KS board chairman Bjørn Arild Gram.

– The variation between municipalities is large and the precision is uncertain. This means that many municipalities will probably not recognize themselves in this macro picture, he says.

– It is demanding to guarantee compensation that hits everyone with precision. Many have experienced less in compensation than they have in cost increases and lost revenue. We are still dependent on close dialogue to handle further development, he added.

More in discretion

To identify the municipalities that have had particularly high costs during the virus outbreak, the Minister has asked the county governors to map the situation in their county. If some municipalities have not received enough money so far this year, the government will propose to increase discretionary funds in the new budget balance for the year, Astrup said.

The local government counselor stressed that there is still great uncertainty about how next year will be. Initially, it was planned that the working group would present a final report on April 1 of next year. Now the group has been switched instead of submitting another interim report in April and continuing the work throughout the year.