7164-224-0

The Economy Report.

On Swedish municipal and county council finances – November 2006

Information concerning the content of the report:Maj-Lis Åkerlund phone +46-8-452 77 54Per Sedigh phone +46-8-452 7743

Swedish Association of Local Authorities and RegionsDepartment of Economy and Governance, Section for Economic AnalysisSE-118 82 Stockholm | Visitors Hornsgatan 20Phone +46-8-452 7747 | Fax +46-8-452 72 [email protected], www.skl.se

© Sveriges Kommuner och Landsting

1st edition, January 2007Graphic form & production: Elisabet JonssonTranslation: Ian MacArthur, Elisabet Jonsson, Anders Brunstedt.Cover illustration: Jan Olsson Form & Illustration AB.Printers: KLF Digitalttryck, Stockholm.Fonts: BerlingNova och Charlotte Sans SKL.Paper: Xerox Colortech Natural White 100 & 200 gr (cover).

ISBN: 978-91-7164-224-0(edition in Swedish: 978-91-7164-146-5, ISSN: 1653-0853 )

1On Swedish municipal and county council finances

Since the beginning of 2005 the Swedish Association of Local Autho-rities and the Swedish Federation of County Councils cooperate underthe name »the Swedish Association of Local Authorities and Regions«(salar). This is the fourth issue of The Economy report. The Reportis published twice a year.

The Economy Report deals with the development of the economyand with the financial situation of the whole local government sectorand of county councils and municipalities, both now and over the com-ing few years.

In this issue we stress the importance of a long-term approach andof safeguarding local self-government.

Where possible we have taken account of the economic and finan-cial implications of the 2007 Government Budget Bill in our calcula-tions. However, further economic analyses of this Bill will be necessa-ry.

The present report has been written by economists at the salarSection for Economic Analysis. The Summary (supplemented withsome tables and diagrams from the main report) and the Annex arepublished here as a separate English document. Ian MacArthur hastranslated the Summary, following slight revisions by Anders Brunstedtand Elisabet Jonsson.

December, 2006

Maj-Lis ÅkerlundThe Swedish Association of Local Authorities and Regions,Section for Economic Analysis

Foreword

Summary and conclusions ........................................................................................ 3

Long-term approach necessary for good finances ........................................ 3

Good central government finances important to

municipalities and county councils .................................................................... 4

Local self-government is good for the economy .......................................... 4

Good economic situation ........................................................................................ 5

Municipalities .............................................................................................................. 6

County councils .......................................................................................................... 7

Sharp downturn at the end of the period ........................................................ 8

Annex ................................................................................................................................ 9

An aggregate picture of municipalities and county councils ................ 9

Breakdown of costs .................................................................................................... 11

Breakdown of revenue .............................................................................................. 11

Breakdown of income from fees and charges .............................................. 12

Breakdown of specific government grants .................................................... 13

2 the Economy Report. November 2006

Summary and conclusions

Contents

In 2005 both municipalities and county councils reported the best net in-come for many years. Net income is expected to be even better in 2006 andamount to more than sek 19 billion – an improvement of sek 7 billion. Thegood state of the economy will result in strong employment growth this yearand next year, which means that the tax base will grow at good pace. Thiswill continue in succeeding years. However, net income will turn sharplydownwards at the end of the period, mainly because inflation erodes the va-lue of central government grants. This can be countered by increasing the go-vernment grants or by municipalities and county councils taking action to in-crease the efficiency of activities and restrict the development of costs.

Long-term approach necessary for good finances

Even though net income for 2005 and 2006 has been good, we must notforget that a certain surplus is needed to meet the requirement for heal-thy finances. Net income of sek 15–20 billion in activities turning overmore than sek 600 billion is not as much as it sounds. sek 15 billioncorresponds to 2.7 per cent of tax revenue and general governmentgrants. The appropriate size of net income varies with the startingpoint, the financial/economic situation and the future prospects of theindividual county council and the individual municipality. For munici-palities and for county councils as a whole we gene-rally use the rule of thumb that net income has toamount to 2 per cent of tax revenue and general go-vernment grants for it to be considered that healthyfinances have been achieved.

The main arguments for positive net income arethat the present generation must meet its own costs,that allocations are needed for future pensions, theneed to secure the value of assets (depreciation doesnot cover price and quality increases for new acqui-sitions), and self-financing of investments. More-over, the budget should contain a buffer for unfore-seen events.




SEK

bill

ion

–10–8–6–4–2

02468

101214161820

County councils

MunicipalitiesAdjustedgov grants

Total

20102009200820072006200520042003200220012000199919981997

Diagram 18 • Aggregate net income for municipalities and county coun-cils excluding extraordinary items, 1997–2010

SEK billion

Source: Swedish Association of Local Authorities and Regions.

Good central government finances important to municipalities and county councils

One important factor for municipalities and county councils is thatcentral government has its finances in good order. This reduces the riskfor sudden state cuts. The most recent calculations suggest a good situ-ation for central government finances. The estimated surpluses in com-ing years are expected to exceed by a good margin what is needed toachieve the target of long-term net lending amounting to 2 per cent ofgdp. We therefore expect central government to adjust general grantsupwards in line with the development of the tax base.

For its part, central government must also provide a stable basis forlocal authority planning in the form of good long-term planning bothconcerning the revenue side and in the event of changes that impact onlocal government activities. It goes without saying that the local go-vernment financing principle must be applied fully.

Local self-government is good for the economy

The Local Government Act requires municipalities and county councilsto formulate financial objectives and guidelines for activities of impor-tance for healthy finances. This emphasises the importance of runningactivities in a cost-effective manner and of having a match between re-sources and the scale and ambitions of activities. This is why it is im-portant that central government exercises control at general levelthrough national objectives – and not with detailed regulation and tar-geted government grants. The body best placed to develop these activi-ties is the body that is responsible, has the best knowledge about themand is closest to citizens. This is why local self-government and the localgovernment financing principle should be safeguarded.

Our questionnaire shows that in a financial perspective the most im-portant aspects of self-government are the right of taxation, the localgovernment financing principle, general government grants, a stablebasis for local authority planning and securing the value of governmentgrants.



Good economic situation

Growth in the international economy is expected toculminate this year and to slow down gradually in2007. In the United States a slow-down already be-gan in the second and third quarters as a result of asignificant weakening of the housing market. In Eu-rope, which is later in the business cycle, growth isexpected to exceed earlier expectations, especially inGermany. Further sharp increases in oil prices maylead to rising inflationary expectations, prices in-creases and therefore higher interest rates. The re-sult may then be the moderation of economicgrowth at the same time as demand turns down-wards.

In 2006 growth Sweden is expected to be the high-est for the past six years. Next year gdp growth isexpected to moderate but remain good. Employ-ment is expected to increase strongly this year andnext year as a result of the good economic situation.During the period 2006–2010 the tax base is expec-ted to grow by more than 4 per cent per year.



Table 3 • GDP supply and demand 2005–2010

Volume change, per cent on previous year

2005 2006 2007 2008 2009 2010

GDP 2.7 4.1 3.3 2.7 2.3 2.0Imports 7.3 9.1 8.9 7.1 6.0 5.2Supply 4.0 5.6 4.9 4.0 3.5 3.1Household consumption 2.4 3.9 4.1 3.1 2.5 2.3Public consumption 0.7 1.5 1.0 0.8 0.7 0.7Central govt –1.5 0.5 0.3 0.3 0.3 0.3Local govt 1.6 1.9 1.3 1.0 0.8 0.9

Grossfix’dcapitalformation 8.5 7.8 5.4 4.0 4.0 4.0Changes in stocks* –0.2 0.0 0.1 0.0 0.0 0.0Exports 6.4 8.7 7.4 6.5 5.5 4.5Demand 4.0 5.6 4.9 4.0 3.5 3.1

*Change in per cent of gdp in the previous year.Source: Statistics Sweden, National Institute of Economic Research andown calculations.

Table 7 • Number of employees per sector 2005–2010

Thousand employees and annual percentage change

2005 2006 2007 2008 2009 2010 2005level Percentage change –2010

Private sector 3,025.2 2.2 1.6 1.4 0.8 0.5 1.3Municipalities 827.3 1.0 1.2 0.5 0.5 0.5 0.7County councils 262.8 0.7 1.5 1.1 0.9 1.2 1.1Central gov’t 240.7 1.4 0.8 0.0 0.0 0.0 0.4Total 4,356.0 1.9 1.5 1.1 0.7 0.5 1.1

Source: Statistics Sweden and own forecast.

Municipalities

Net income for municipalities improved sharply in2005. Net income exclusive of extraordinary itemsamounted to sek 9 billion.

We calculate the aggregate volume effect of de-mography, reforms and labour market policy at 1.7per cent in 2006. The volume increase in 2006–2010is 0.9 per cent on average.

For 2006 our assessments lead to very good net in-come – of the order of sek 14 billion. In subsequentyears net income is expected to show clear deterio-ration. However, if the value of government grants issecured we expect that aggregate net income formunicipalities will reach the rule-of-thumb level of2 per cent of taxes and general grants.



Inde

x

88

94

100

106

112

118TotalOther

activities

Care ofdisabled

Elderlycare

Childcare

Upper second-dary school

Compul-sory school

201020092008200720062005

Diagram 13 • Volume trend in tax-financed activities, 2005–2006

Index 2005 = 100


Per

cent

0,0

0,5

1,0

1,5

2,0

2,5

3,0

3,5

4,0Adjusted gov grants 2009 and 2010Calculation

20102009200820072006200520042003200220012000

Diagram 14 • Municipal net income 2006–2010

Percentage of taxes and general government grants


County councils

In 2005 county councils reported positive net in-come in aggregate, doing so for the first time since1992. Net income amounted to sek 4.3 billion. Thecounty councils have worked actively to developtheir activities and keep cost increases down. But in-creased government grants and tax increases are alsobehind the positive trend in net income.

In the period 2006–2010 volume growth is relati-vely stable with an average of 1.8 per cent per year.

Our assessment is that in 2006 the county coun-cils will report positive net income of more thansek 5 billion, which is in line with healthy finances.We expect net income to also reach a reasonable le-vel in 2007–2008 but to deteriorate sharply there-after. In addition to an upward adjustment of go-vernment grants with the growth of the tax base, ex-tensive action to improve efficiency will be requiredif net income is to achieve the rule-of-thumb levelof 2 per cent of taxes and general grants.



Per

cent

–3–2

–10

12

34

56

7

Forecast 2006Net income 2005

Jönk

öpin

g

Upp

sala

Gäv

lebo

rg

Hal

land

Kal

mar

V:a

Göt

alan

d

Dal

arna

Stoc

khol

m

Ble

king

e

Väs

terb

otte

n

Öre

bro

Rik

et

Kro

nobe

rg

Öst

ergö

tlan

d

Got

land

Jäm

tlan

d

Vär

mla

nd

Sörm

land

Skån

e

Väs

tern

orrl

and

Väs

tman

land

Nor

rbot

ten

Diagram 15 • Net income, 2005 accounts and forecast for 2006

Percentage of net costs

Note: Stockholm refers to the affiliated county council companies. Ös-tergötland according to the ”fully funded model” concerning pension liabilities. Gotland refers to the whole local authority (i.e. includingmunicipal functions). Effects of the new Retirement Agreement, a lo-wering of interest rates as well as changes due to assumptions of a dec-reased death rate have been taken into account by the following countycouncils: Kalmar, Västernorrland, Västra Götaland and Västmanland.The others have either not taken into account the new RetirementAgreement, or taken into account both the effects of the new Agree-ment as well as lowered interest rates.Source: Swedish Association of Local Authorities and Regions.

Per

cent

–5

–4

–3

–2

–1

0

1

2

3

Adjusted gov grants 2009 and 2010Calculation

20102009200820072006200520042003200220012000

Diagram 17 • County council net income 2000–2010Percentage of taxes and general government grants


Sharp downturn at the end of the period

Despite relatively favourable demography and the expectation of a goodtax base development in coming years the economic situation alreadylooks much worse in a few years. This also applies if general governmentgrants are adjusted upwards with tax base growth. There is also somedifference in the development of net income between municipalitiesand county councils. Demography-related volume growth is close tozero in municipalities but amounts to 0.7 per cent per year in countycouncils. In all the average volume growth in the period is 0.9 per centin municipalities and 1.8 per cent in county councils. This leads to high-er cost growth and a stronger deterioration of net income for countycouncils.

We can conclude that the present tax base is not sufficient for thelocal government welfare undertaking some years from now. The dia-logue on welfare provision in the future therefore needs to be deepenedand intensified.



The first part of this annex reports some key indicators and anumber of tables and diagrams taken from the municipality andcounty council sections that have been added together here togive an overall picture. This is followed by the breakdown ofcosts and revenue for municipalities and county councils separa-tely.

An aggregate picture of municipalities and county councils


Annex

Table 23 • Key indicators for municipalities and county councils 2001–2007

Per cent and thousands

2001 2002 2003 2004 2005 2006 2007

Average tax rate, % 30.54 30.52 31.17 31.51 31.60 31.59 31.56municipalities 20.57 20.53 20.70 20.80 20.84 20.83 20.78county councils 9.97 9.99 10.47 10.71 10.76 10.76 10.78

Number of employees,thousands 1 068.9 1 080.5 1 088.5 1 088.3 1 090.1 1 100.4 1 114.1municipalities 814.4 829.0 833.2 825.3 827.3 835.8 845.5county councils 254.5 251.5 255.3 263.0 262.8 264.6 268.6

Note: Average employment according to the National Accounts.Source: Statistics Sweden.

Tabell 24 • Sammantagen resultaträkning åren 2005–2010

Miljarder kronor i löpande priser om inte annat anges

Outcome Forecast Calculation2005 2006 2007 2008 2009 2010

Income of activities 123.8 128 132 134 136 141Expenses of activities –609.8 –638 –671 –698 –728 –762Depreciation –19.3 –20 –20 –21 –22 –22Net expenses of activities –505.3 –529 –559 –585 –614 –643Tax revenue 432.4 459 473 494 516 540General gov’t grants and equalisation 82.4 87 93 98 98 99Net financial income 3.7 3 3 3 3 3Net income excl. of extraordin. items 13.2 19 10 10 4 –1Share of taxes and grants, % 2.6 3.5 1.7 1.7 0.7 –0.1

General government grants adjusted up-wards by tax base forecast 3.3 7.0Net income for the year after tax base adjustment 13.2 19 10 10 8 6Share of taxes and grants, % 2.6 3.5 1.7 1.7 1.2 1.0

Cost reduction to achieve 2 per cent 0.0 0.0 1.5 1.9 4.7 6.3which corresponds to a volume decrease of 0.3% 0.3% 0.8% 0.9%or a tax increase of 10 öre 12 öre 28 öre 37 öre

Net income for the year with the 2 per cent target 13.2 19 11 12 12 13Share of taxes and grants, % 2.6 3.5 2.0 2.0 2.0 2.0

Source: Statistics Sweden and Swedish Association of Local Authorities and Regions.

For the aggregate net income of municipalities and countycouncils, see diagram 18 on page 3.


Annex

Per

cent

–1

0

1

2

3

4

5

6PriceVolume

201020092008200720062005200420032002

Diagram 19 • Aggregate cost growth broken down by volume and pricein municipalities and county councils 2002–2010

Per cent


Breakdown of costs

Municipal and county council costs can be described in two ways:by breaking them down by activity and by breaking them downby cost type.

If costs are broken down by activity (diagrams 20 and 21) threeconclusions can be drawn. First, the core activities of municipa-lities and county councils account for a considerable part of to-tal costs. For municipalities, schools, health care and social servi-ces account for more than 75 per cent of costs. For county coun-cils heath and medical services account for 90 per cent of costs.In diagram 20 pharmaceutical benefits are included in the vari-ous activities.

Second, it is clear that a large part of municipal and countycouncil costs are related to demographic factors, i.e. changes inage structure affect costs. This relationship is stronger for muni-cipalities than for county councils.

Third, a large share of costs is regulated through legislation —acts and government ordinances – that restricts the scope for mu-nicipalities and county councils to reduce their costs whenchanges occur on the revenue side.

When costs are broken down by cost type (diagrams 22 and 23)it can be seen that the largest single cost type is personnel costs.These costs account for 57 per cent of municipal resources and 50per cent of county council resources. There are also staff-relatedcosts in the parts of municipal and county council activities thatare run by other entities on behalf of local governments. If theseservices are included, then the overall personnel-related costs formunicipalities and county councils amount to 70 per cent and 65per cent of total costs respectively. The remaining 30 and 35 percent of costs mainly consist of costs for premises, purchases ofgoods and grants and transfers (mainly municipal costs for finan-cial assistance, i.e. social assistance to individuals). The large sharetaken by personnel costs means that both the price and the vo-lume of the workforce are crucial for total costs.

Breakdown of revenue

How municipalities and county councils each finance their acti-vities is shown in diagrams 24 and 25. Municipalities and countycouncils raise the main part of their revenue by themselves. Taxrevenue, fees and charges and certain other revenues finance 80


Annex

Other activities 15.4 %

Commercial activities 5.8 %

Individual & family care 4.4 %

Financial assistance 2.4%

Care of disabled 10.3 % Elderly care

19.6 %Other education

4.1 %

Upper secondary

school 7.5 %

Compulsory school 18.1 %

Preschool services and school age child care

12.5 %

Diagram 20 • Breakdown of municipalities’ costsfor activities in 2005, ca SEK 410 billion

Sources: For diagrams 20–30 the data for county councils come from the Swe-dish Association of Local Authorities and Regions and the data for municipa-lities come from Statistics Sweden.


Public transport & infrastructure 4.6 %

Education & culture 2.2 %

Pol. activities 0.5 %

Other health & medical care 8.8 %

Dental care 4.1 %

Spec. psychiatric care 8.5 %

Specialist somatic care 48.5 %

Primary care 19.2 %

Diagram 21 • Breakdown of county councils’ costsfor activities in 2005, ca SEK 198 billion

Calculated capital costs 5.8 %External rents 4.0 %

Grants & transfers 6.1 %

Other services 6.5 %

Purchase of services 12.7 %

External goods 7.6 %

Personnel costs 57.2 %

Diagram 22 • Breakdown of municipalities’ costs bycost type in 2005, ca SEK 410 billion

Depreciation etc 3.1 %Grants & transfers 5.5 %

External rents 1.4 %

Other services 10.3 %

Purchase of services 11 %

External goods 18.7 %

Personnel costs 49.9 %

Diagram 23 • Breakdown of county councils’ costsby cost type in 2005, ca SEK 198 billion

per cent activities in both municipalities and county councils. Atfirst sight this may appear to give a picture of a large measure offinancial freedom. However, as taxes are high in most municipa-lities and county councils, this way of increasing revenues can belimited. In the case of fees and charges, the possibilities of increa-sing revenue are very limited since the government introducedmaximum charges in child care and elderly care.

The remainder of revenue consists of funding from central go-vernment in the form of government grants. Most governmentgrant to municipalities is given in the form of unrestricted funds.A small part of the government grant is targeted on various acti-vities and is linked to some action to be taken by the municipa-lity. A large part of government funding for county councils con-sists of the grant for pharmaceutical benefits.

Breakdown of income from fees and charges

Traditionally, self-financing by municipalities and county coun-cils has consisted of taxes, on the one hand, and fees and charges,on the other. The latter source has accounted for a small portionof revenue. Fees and charges have had a dual role in local govern-ment finances: an income source and an instrument for influen-cing the consumption of various local government services.

Fees and charges are interesting in two perspectives: First, howmuch municipalities and county councils raise in fees and char-ges and for what activities and, second, how large a share of localgovernment costs is covered by fees and charges, both in total andper activity.

In 2005, municipalities collected sek 13.6 billion in fees andcharges in tax-financed activities. Since 2001 revenue from feesand charges has decreased by sek 2.2 billion due to the introduc-tion of maximum charges for some services. The decrease wasbeen reduced between 2003 and 2004 on account of a higher ceil-ing in the maximum charge for child care. The largest individu-al source of charge revenue is pre-school services and school-agechildcare. Other activities with substantial charge revenue are el-derly care and infrastructure and protection. In the latter casethis involves large fees for municipal parking and some physicalplanning (diagram 26).

If municipal revenue from fees and charges is related to costs(level of charge-financing) we see that they finance 3.5 per cent,which is a reduction of just less than 1.5 percentage points since2002. Previously pre-school services and school-age childcare wasthe activity with the highest level of charge-financing. In 2005 itis infrastructure and protection that has the highest level (seediagram 27).


Annex

Other revenue 4.8 %Rents & leases 3.4 %

Sale of services & contracts 1.1 %

Fees & charges 6.8 %

Specific government grants 3.9 %

Government grants 11.6 %

Tax revenue 68.4 %

Diagram 24 • Breakdown of municipalities’ revenuefor activities in 2005, ca SEK 417 billion

0 2 4 6 8 10 12 14

Infrastructure & protection

Culture & leisure

Preschool etc

Education

Elderly care

Care of disabled

Other services

Total

Per cent

Diagram 27 • Level of charge-financing in municipaltax-financed activities 2005

Other revenue 5 %Fees & charges 2.9

Specific government grants 2.9 %

Grant for pharma-ceutical benefits 9.7 %

Government grants 7.1 % Tax revenue

72.4 %

Diagram 25 • Breakdown of county councils’ reve-nue for activities in 2005, ca SEK 203 billion

Other activities 3.3 %Care of disabled 2.4 %

Elderly care 22.4 %

Education 2,9 %

Preschool etc 33.6 %

Culture & leisure 8.2 %

Infrastructure & protection

27.2 %

Diagram 26 • Breakdown of fee and charge revenue2005, municipalities, ca SEK 13.7 billion

For county councils fees and charges account for a smaller shareof total revenue. In 2005 county councils collected sek 5.8 billionin fees and charges (diagram 28). The level of county council feesand charges is affected by the level of company-formation in me-dical and dental care. Fees and charges finance 3 per cent of coun-ty council activities, a small decrease on previous years. Dentalcare is the activity that dominates county council charge-finan-cing, both as a share of the total fees and charges (46 per cent)and in relation to costs (33 per cent). A posible future dental re-form will reduce the charge-financing of dental care.

Breakdown of specific government grants

The transition from a number of specific government grants to ageneral government grant in 1993 excluded a number of grants tomunicipalities. They were primarily grants regarded as compen-sation for services carried out for the Government. For the coun-ty councils the main part of the former specific governmentgrants consisted of compensation to the organisers of health andmedical services that was general in character and not subject todetailed regulation. As a result the transition for the countycouncils was not as substantial. The government grants to coun-ty councils that were abolished include those for special schoolsfor the intellectually disabled and transport services for disabledpeople.

The refugee grant, labour market grants and compensation formunicipal adult education account for 32 per cent of specificgrants (diagram 29). The compensation paid by the Governmentfor the loss of charge revenue in child care due to the maximumcharge (27 per cent) is also included.

In the case of the county councils government grants to the ac-tivity designated as other health and medical care account for byfar the largest share (39 per cent). These government grants arefor research and development (diagram 30).

There are relatively few specific grants for core municipal ac-tivities and they only account for a small share of total revenue.This share has increased in recent years, partly because of thegrant for staff reinforcements in compulsory school and uppersecondary school. As of 2005 the specific grants are decreasing inmonetary terms, as some of the former specific grants are beingtransferred to the general government grant. One example is thegrant for staff reinforcements in compulsory school and uppersecondary school. For county councils the level of specific go-vernment grants has been relatively constant over the past threeyears.


Annex


Dental care 45.6 %


Specialist somatic care

24.4 %

Primary care 18.7 %

Diagram 28 • Breakdown of fee and charge revenue2005, county councils, ca SEK 5.8 billion


Education &culture 15.3 %

Other health &medical care 39.1 %

Dental care 3.9 %


Spec. somatic care 12.5 %

Primary care 9.4 %

Diagram 30 • Specific government grants to countycouncils 2005, ca SEK 5.9 billion


Labour marketprogrammes 13.8 %

Refugee reception 8.6 %

Individual & family care 2.3 %

Care of elderly & disabled 2.9 %Other education

3.2 %

Municipal adult education

9.7 %

Upper secary school

Comscho

Preschool etc 27.4 %

Diagram 29 • Specific government grants to muni-cipalities 2005, ca SEK 16.4 billion

Swedish Association of Local Authorities and RegionsSE-118 82 Stockholm Visitors Hornsgatan 20Phone +46-8-452 70 00 Fax +46-8-452 70 [email protected], www.skl.se

ISBN 978-91-7164-224-0

ISSN 1653-0853

The Economy Report. On Swedish Municpal and Countycouncil finances is a series presented byThe Swedish As-sociation of Local Authorities and Regions and it appearstwice a year. In it we deal with the present economic situ-ation and developments in municipalities and countycouncils. This issue covers the period until 2010.

In 2005 net income for municipalities and county coun-cils was better than for many years – over SEK 13 billion.In 2006 it is expected to be even better - more than SEK19billion. But despite relatively favourable demography andexpectations of good tax base growth the financial situa-tion looks much worse in just a few years time. This is alsotrue if general government grants are adjusted up-wardsin line with tax base growth.

Action to increase efficiency therefore needs to con-tinue if taxpayers are to get as much as possible for everykrona they pay. The body best placed to develop these ac-tivities is the body that is responsible, has the best know-ledge about them and is closest to citizens. Local self-go-vernment is good for the economy.

The Economy Report. On Swedish Municpal and Countycouncil finances – November 2006 can be downloadedfrom our website: www.skl.se.

7164-224-0

Documents

Transcript of 7164-224-0