The Finance Ministry has published a highly controversial report which claims that the financial situation of the City of Tallinn is excellent and that Tallinn was capable of financing additional projects in the value of tens of millions of euros, writes ERR.
The city claims that at present the government allocates only EUR 30m to local governments for road maintenance which is equal to 10% of the fuel excise duty collected by the state, although local government roads make up about 40% of all roads in Estonia.
In March, City of Tallinn sued the government over the share of funding of road repair and maintenance from the central government. Tallinn estimates that while its public transportation company Tallinna Linnatranspordi AS paid the state EUR 3.8m in fuel excise duty last year, the government allocated Tallinn less then EUR 3m for road maintenance costs.
"Even the excise duty that we are paying the state is higher than what we receive from the state. We believe that the government should take this into account and this is why we went to court," explained Deputy Mayor Kalle Klandorf.
To better defend government's interests, the Ministry of Economic Affairs had asked the Finance Ministry to prepare an assessment of the City's financial situation.
According to the Finance Ministry, the City's result in basic activities was the second-best of all time, and was only behind the result it made in 2007, the boom year. The City has also shown that it is capable of keeping spending growth below income growth.
"The financial situation of Tallinn has enabled it to voluntarily handle issues that by law are the responsibility of the state.
For instance, this year the City will pay theatres EUR 1.3m and spend 0.9m on community-related jobs. The City also pays almost 7m euros in pension allowance, 1.23m euros in birth allowance and another 1.2m in school allowance for first-graders.
In addition, in 2013 Tallinn will pay more than EUR 10m for managing social housing, 3m to Tallinn TV and subsidises free public transport with tens of millions of euros.