Riga’s mayor plans to implement most new initiatives without approving the budget

Riga City Council chairman Oļegs Burovs has issued an order that, according to him, allows for restructuring of the municipality’s finance flow so that it is possible to implement this year’s planned initiatives using the last year’s budget base.

Burovs told journalists on Monday, 10 February, that in the light of the recent political developments it has become clear that it is not possible to adopt the 2020 budget with votes of his faction alone. This is why he has issued the order that will regulate the executive power’s work until the budget has been adopted.

According to Riga City Council Finance Department’s acting director Uldis Rakstiņš, the law on municipal budgets outlines that if the city council fails to approve this year’s budget, its expenditures cannot exceed 1/12 part of last year’s expenditures as long as the number of functions the municipality has to perform does not reduce.

As a result of this, an order has been issued for the city council to finance only the initiatives that were implemented last year. The municipality believes this will allow increase wages for kindergarten teachers and perform road repairs and other tasks because they were provided last year as well.

«Last year our expenditures were EUR 1.050 billion. This year’s expenditures are planned at EUR 1.063 billion. This means we had to put away expenditures worth EUR 13 million,»
explained Rakstiņš, adding that the money was put away at the expense of new initiatives and delayed projects co-financed by the EU.

For example, currently finances of EUR 800 000 will not be provided to Riga Film Fund, but foreign film-makers will be able to apply for funding. It is planned for money to be paid after the budget’s approval. Now finances worth EUR 2 million for restoration of parks and EUR 300 000 for revitalization of polluted areas are planned to be allocated after budget approval.

At the same time, Burovs says the order includes a section that states the city council must finance initiatives related to ensuring participation of Riga’s school children in the upcoming school youth song and dance celebration. In this context it will be possible to commence the restoration of Espanade Park, which is one of the locations for the celebration.

The mayor explained that this order will allow the city council to increase wages for social care workers, secure health insurance interests for education workers, continue street repairs and other tasks for which money is planned to be secured within this year’s budget project.

Part of the initiatives, for example the wage increase for school and kindergarten nurses, as well as social care workers, were secured starting with 1 February.
Riga City Council’s CEO has been asked to assess the possibility of providing insurance policies for hobby group and vocational education teaching staff in 2020 without exceeding the specific volume of the still unapproved budget project. The city council will still have to decide on increasing childbirth benefits to EUR 250.

Generally the municipality explains that with the issue of the order institutions of the city council will be allowed to perform procurement procedures and ensure successful implementation of procurements, but they will not be allowed to sign contracts within budget programmes that were not included in the 2019 budget. The only exception is financing Latvian school youth song and dance celebration.

If planned expenditures of capital associations and foundations that receive grants from the municipality exceed last year’s funding, they will have to be planned in the second half-year of 2020. Municipal budget institutions and agencies will not have the right to take on new commitments for EU projects if the co-financing of the project exceeds EUR 100 000.

The order also outlines that the Finance Department will have the right to sign loan requests and loan contracts if permission is received from the Municipal Loan and Guarantees Control and Supervisory Council.

Burovs’ order is neither coordinated with the Environment Protection and Regional Development Ministry nor the Finance Ministry. However, the management of the city council and financiers are confident the law is not breached this way.

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