Kučinskis: Fully revised budget draft must be handed over to the new Saeima and government

Finance Minister Māris Kučinskis (AS) met with leaders of the Latgale planning region municipalities in Lūznava on Saturday, June 27, to discuss upcoming changes to the municipal financial equalization system and EU structural fund investments for the 2028–2034 period.

Kučinskis stressed that before the upcoming Saeima elections, it is necessary to revise the state budget, make procurement data public, and improve the municipal financial equalization system to ensure that Latvian municipalities are in a more equal position and to reduce administrative burden.

The Ministry of Finance explains that the new equalization system aims to solidarily distribute resources to municipalities in order to reduce revenue disparities. Under the new model, property tax revenues will remain with municipalities, while personal income tax revenues will be split into two parts: one part distributed based on actual performance coefficients, and the other included in the basic equalization funding and distributed according to average costs.

New criteria values are also planned, based on municipalities' actual expenditures by functional categories. The system would also eliminate mutual settlements for educational services from grade 1 and remove the requirement to submit reports on catering expenses, thereby reducing administrative burden.