Our city does not outgrow consumer prices either. In the draft budget, expenditures increased by about 6.1 million. euro. The political cycle is coming to an end and the elections are approaching, which is why we are facing a significant increase in investment in concrete and asphalt. Related to this is a proposal for new loans of 4.2 million euros. What are the city’s investment priorities for the future? How was the budget set and what needs to be improved?
Despite our current revenue growth, inflationary pressures and changes in education laws have had a larger negative impact on the spending side of the budget. We will pay more for public transportation. The city will pay further losses in the public interest and will finance the increase in electricity and fuel prices. Therefore, in 2022, we will pay more than 1.1 million approx. The price of electricity will also affect the provision of essential public services such as public lighting and the operation of city buildings. As I have already indicated, there is an important change, for example, the increase in spending on education (0.76 million), caused by changes in school regulations.
2022 – The year our money turns into cement
According to the proposal, the city should expect more new investment and a further increase in capital expenditures from 17 to more than 21 million euros. Capital expenditures are covered by Eurofunds, state budget, special funds and loans. According to the proposal, half of the capital expenditure should go to pouring concrete and asphalt city. More than 10 million euros will go towards rebuilding local roads, building sidewalks and bike paths.
The city has also planned new investments, so when this year’s draft budget is approved, there is talk of new loans totaling around €4.2 million. A year ago, as members of the European Parliament, we approved a 13 million credit line and increased capital expenditures and the way into city debt very dramatically. Once again, a new requirement for approval of loans comes to deputies. Thus we increase the credit burden and the future costs of repaying our debts. The increase in the debt brake ratio will go up by 15% and the overall indebtedness and credit debt will increase. You will find the basis for credit policy is yours. You will find budget wallpaper is yours.
Debt as a tool for development and unbalanced priorities
In the present situation of local government finance, debt finance is one of the primary sources of finance. The city has sold a lot of property in the past and the income from its own activities has limits. The current level of indebtedness and the city’s financial health have allowed the city to borrow more, and even today it allows us to increase our credit burden. In principle, I am not against lending and the search for other external sources of financing. Favorable money market conditions. I see two dimensions as problematic: 1. handcuffing for potential future management of the city and 2. unbalanced direct investment in basic infrastructure – roads, sidewalks, bike paths.
Today’s indebtedness, figuratively speaking, will partially tie the hands of the future political representation of Banska Bystrica. The new representatives will be constrained in their credit policy and new investments by debt repayment and the legislative ceiling on the debt ratio. So the question is what is a fair and reasonable level of debt? The second dimension, with which I do not agree, is the unbalanced adjustment of capital expenditures to the challenges of the future and the signs of the times. It is definitely necessary to have quality sidewalks and paths. I also want to feel like I’m in a German town, unfortunately the investment debt in this region can’t be repaid in one or two terms. We need decades of sound management and organization. Personally, I feel that we have other pressing challenges ahead – an aging population, climate change and the lack of housing. We need fundamentally more investment in social services and aged care. We will be in a position where we have to mitigate the effects of climate change in cities. Today, we view housing as a commercial or investment component, and not as a prerequisite for economic development and quality of life. After the 1990s there was the unsystematic privatization of earlier forms of ownership, and today I increasingly hear the voice of my generation about housing unavailability or disproportionately high housing costs compared to other countries. The city should develop more rental housing policies or negotiate with developers, as is common in Western European countries. It will not succeed without investment and good management.
Budgeting process and availability – it’s different!
When preparing the budget, the first violin is played by the city’s economic department and administration. Budget notes are available to budget officers and administrators with the best overview and the best knowledge of methodology and laws. The extent to which budgeting and budgeting can be understandable to members of parliament and city residents depends on its originators and processors. The policies and political priorities of individual parliamentary groups also enter into the creation of the budget. Last year, investment priorities were formed on the basis of an agreement on the priorities of parliamentary blocs. However, as MEPs, we have already received a record of investments and priorities from the city, and the extent to which we can responsibly influence investment in the future is limited. Members cannot be experts in everything, so we rely heavily on the work of administrators. For example, an individual MP that is not included does not have an appropriate effect on the city budget. Our Club of Representatives, Banska Bystrica’s alternative, has always called for an open, professional and advance discussion of budget and priorities. We were able to push a little, but as I mentioned earlier, the system is set up in such a way that city management and experts really have the main say and influence.
Last but not least, there is an ongoing problem that I have seen since the beginning of my tenure. It is a lack of understanding of the budget for the population and access to information and media. The budget can be commented on by city dwellers, but in reality only a few active residents comment on the budget. The city budget should be designed so that it can be understood by a person without an economic education and is accessible to the widest possible audience. There have been positive changes in the budget presentation and creation process in the past couple of years, yet we are still far from ideal. There can be specialized budget assemblies, and the budget format can be more readable and have better graphic processing. More space can be allocated and created for the budget, for example in the city council newspaper, and it is also necessary to provide more space for expert committees and city deputies when drawing up the budget.
Many things can change. Change will not depend on the individual, but on the quality of the city’s future and current management, the commitment of political representation and the commitment and capabilities of city officials.
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