Tartu opposition criticises rising debt burden of the city
The debt of the Estonian city of Tartu may grow from 190 to about 260 million euros by 2030. The opposition urges savings, while city leaders explain the borrowing by investments and a tax reform.
In Tartu, Estonia's second-largest city, often called the student capital, opposition councillors are criticising the planned growth of the city's debt. According to the budget strategy forecasts, the debt may rise from the current 190 million euros to about 260 million euros by 2030. City leaders link the borrowing both to a reform of local government taxation and budgets and to an investment programme.
Investment plans
Over the next four years, Tartu plans to invest around 290 million euros. The largest item is culture, at about 100 million euros, including the construction of the Siuru cultural centre. A further 60 million euros is earmarked for education: schools, kindergartens, routine repairs and comprehensive reconstruction of buildings. Almost 10 million euros will go to environmentally friendly modes of transport, and road and street repairs will continue. Of the additional borrowing, 26 million euros is intended for building the Veeriku school.
The city's explanation
Tartu Deputy Mayor Martin Bek said one reason is the so-called Robin Hood reform, which will leave the city about 17 million euros short. Income tax revenue in Tartu has fallen, but financially sustainable local governments get an exception: instead of capping debt at 60% of core revenue, a limit equal to eight times the operating financial result applies. This increases borrowing capacity.
Opposition position
Artjom Suvorov, a member of the Tartu city council for the opposition Centre Party, believes the city should look for savings. By his account, in 2030 interest payments alone will come to about 10 million euros a year, a sum that could cover, for example, free kindergartens or free public transport. He called for more critical scrutiny of spending in future.
The Social Democrats, also in opposition, broadly agree with the main directions of the strategy but think the growth of debt must be monitored. Council member Elo Kiivit (SDE) said the strategy will be reviewed again so that, besides Siuru and school buildings, attention is paid to cutting less significant expenses, and to considering whether to adjust the amount of borrowing once Siuru is completed.
