The government’s additional electricity tax will cost Oslo a billion kroner. The city council avoids its own investments, but withdraws 700 million from the city’s “oil fund” to pay the bill.
– For the past three weeks I have had a lot of pain in my stomach. It’s very hard and I don’t do it easily.
Oslo’s finance councillor, Einar Wilhelmsen (MDG), talks about the action he is now taking to get the city’s budget for 2023.
He withdraws NOK 700 million from the so-called premium severance fund. It is an oil fund for the municipality earmarked to cover future pension costs. The fund is worth less than NOK 3 billion today.
The background of this is the new tax imposed by the government on hydropower. Oslo budgeted NOK 2.5 billion in dividends from Hafslund the following year. With the tax Einar Wilhelmsen calls “a Christmas present from the government”, Oslo will have to cut a billion from the budget. That’s happening in an additional system presented Thursday.
Issuance of new low fare ticket
In addition to collecting money from the fund, Oslo is implementing several smaller cuts.
- The new lower ticket price for single tickets is postponed from January 7 until Easter. This saves 50 million in next year’s budget.
- Oslobygg, which is responsible for schools, kindergartens and other municipal buildings, will reduce its subsidy by NOK 50 million. This will lead to delays and cuts in maintenance and buildings and ICT.
- Origo, the municipality’s digitization agency, will cut NOK 4.8 million. The same goes for the municipality’s Development and Skills Agency, which receives a total of NOK 36 million. Grants for the establishment of many private sports facilities are also what the City Council calls smaller cuts.
The remaining billion comes from higher-than-expected tax revenue and the state’s coronavirus compensation bill. In addition, Wilhelmsen has captured several small sums from various parts of the municipality.
Save your own investments
However, the city council’s own investments were not reduced. Here you will find school meals, free activity school for all from class 1 to 4. Class, circulation pathways and CO₂ capture in Klemetzrud.
“It’s a tough job, but I’m very pleased that we’ve been able to reach the target without making any dramatic cuts to welfare services, climate initiatives or anything else,” says the Finance Council.
– Are you taking charge of your own budget and pushing expenses forward instead of cutting back?
– In the situation we are in now, I believe it is important for the municipality to maintain the welfare offer for residents. There is no reason to scale back our climate work. Instead, it’s incredibly important that we stand up for it and take initiatives that we’ve set up ourselves, helping people as much as we can to keep giving, he says, and continues:
– We are a big municipality. We have over 50,000 employees. He says that one should be careful not to make sudden changes.
Einar Wilhelmsen also emphasizes that withdrawing from the fund is an unusual but temporary situation to save them.
– He says that we have more problems in 2023 and 2024.
Among other things, he explains how the government’s new ground rent tax works. An additional tax is levied when the electricity price is too high. The tax must be temporary.
Wilhelmsen’s problem is that Oslo has budgeted more electricity revenue for the next two years. In addition, the municipality has large expenses in its businesses due to abnormally high electricity prices.
– Then it might be right to do it this way, says Wilhelmsen.
– It is also important for me to say that we plan to repay the premium withdrawal fund at the end of the term. We balance and manage this again.
Spending money is critical
The Munnetra Party is highly critical of the use of funds.
– In a bad economic situation, they choose to finance their election campaign budget with ordinary people’s pension money, Lars Peter Solas, head of the FRP in Oslo, tells Optenbosten. He believes the City Council should have identified opportunities for budget cuts.
– This was last done during the Corona Pandemic. It is a national and global crisis. That says something about where the threshold for using those funds should be, he says.
Water and sewer lines burst
It is already known that water and sewage charges in Oslo will increase sharply next year and will continue to increase. In the Oslo budget presented by the city council almost two months ago, the fee increases by 16 percent.
This is due to rising water and sewer costs.
Costs now appear to be rising more than the municipality envisioned in September. So the fare will increase more than what was announced earlier.
Next year, water and sewerage taxes in Oslo will rise by 23.4 percent.
And it will rise further in the coming years. Aftenposten’s calculation shows that the tax will double in five years. This year, a family with an area of 120 square meters pays NOK 5,656 in annual tax.
If the new projections are correct, the same household will pay a full NOK 12,600 a year in 2026.
– I think this is a hair-raising example of how far the city council sits from the everyday lives of the people of Oslo. Solas says it will cost the already hard-pressed family finances in Oslo.
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