3.5 Financial Status of Municipalities

3.5 - Financial Status of Municipalities


Municipalitie income tax is the part that goes to the Municipalities. Here you can see a  summary of the income tax in few municipalities in East Iceland since the year 2002.

Results

a) Changes of net municipal income tax in selected municipalities in East Iceland

Net Municipal income tax (without Equalizing fund) in Fjarðabyggð and Fljótsdalshérað municipalities in the years 2002-2018 in price level index for 2018.

Figure 1:  Net Municipal income tax (without Equalizing fund) in Fjarðabyggða and Fljótsdalshéraðb municipalities in the years 2002-2018 in price level index for 2018.

a Fjarðabyggð in its current form was established with the merger of the municipalities Fjarðabyggð, Mjóafjarðarhreppur, Austurbyggð (previously Búðahreppur and Stöðvarhreppur) and Fáskrúðsfjarðarhreppur in 2006. In the year 2018 Breiðdalshreppur merged into Fjarðabyggð. Figure 1 shows the sum of net municipal income tax in Fjarðabyggð and its preceding municiplaities in the years 2002-2018.

b Fljótsdalshérað in its current form was established in 2004 with the merger of Austur-Hérað, Fellahreppur and Norður-Hérað municipalities. The results reported in Figure 1 for Fljótsdalshérað  in the years 2002 - 2003 are the sums of net municipal income tax in these three municipalities.

Net Municipal income (without Equalizing fund) tax in Seyðisfjörður, Fljótsdalshreppur and Djúpavogshreppur municipalities in the years 2002-2018 in price level index for 2018

Figure 2: Net Municipal income (without Equalizing fund) tax in Seyðisfjörður, Fljótsdalshreppur and Djúpavogshreppur municipalities in the years 2002-2018 in price level index for 2018.

Raw data in Excel

Updated: November, 15th 2019
Source: Samband íslenskra sveitarfélaga

b) Municipal income vs expenditure

Figure 3 displays the income/expenditure ratio in A and B operation of selected municipalities in Mid East Iceland from 2002 - 2018. Value over 100% means that income is more than expenditure. Value under 100% means that income is less than the expenditure.

Figure 3. Municipal A and B operation income / expenditure ratio in East Iceland 2002 - 2017

Figure 3: Municipal A and B operation income/expenditure ratio in East Iceland 2002 - 2018.

Table in PDF

Raw data in Excel

Updated: November, 15th 2019
Source: Icelandic Association of Local Authorities (Samband íslenskra sveitarfélaga

c. Municipal gross margin in East Iceland

Local government gross income shows municipal income tax, minus operations (A segment).

Figure 4. Contribution margin as a ratio of income.


Figure 4: Contribution margin as a ratio of income.

Raw data in Excel

Updated: November, 15th 2019
Source: Samband íslenskra sveitarfélaga Retrieved October 25th 2019 from http://www.samband.is/media/arsreikningar-sveitarfelaga/Net_Rekstrarreikningur.xlsx

d. Municipal debt level in East Iceland

Debts and obligations in A operation in selected municipalities in East Iceland from 2002 - 2018.

Figure 5: Ratio of debt/income in Municipalities in East Iceland 2002 - 2018Figure 5: Ratio of debt/income in Municipalities in East Iceland 2002 - 2018.

Figure 6: Dept in thousands of ISK in Fjarðabyggð and Fljótsdalshérað 2002 - 2017 in consumer price level index for 2018Figure 6: Dept in thousands of ISK in Fjarðabyggð and Fljótsdalshérað 2002 - 2018 in consumer price level index for 2018.

Figure 7: Liabilities in thousands of ISK in Seyðisfjörður, Vopnafjarðarhreppur, Fljótsdalshreppur, Borgarfjarðarhreppur and Djúpavogshreppur 2002 - 2018 in consumer price level index for 2018Figure 7: Liabilities in thousands of ISK in Seyðisfjörður, Vopnafjarðarhreppur, Fljótsdalshreppur, Borgarfjarðarhreppur, Breiðdashreppur and Djúpavogshreppur 2002 - 2018 in consumer price level index for 2018.

Raw data in Excel

Updated: November 18th, 2019
Source: Samband íslenskra sveitarfélaga 

Metrics, Targets and Monitoring Protocol


What is measured?

  1. Changes of municipal income tax in selected municipalities (Project effect: indirect).
  2. Municipal income vs expenditure (including financial items), (Project effect: induced).
  3. Municipal income vs. expenditure (including financial items).
  4. Municipal debt level in East Iceland

Targets:

  1. Not applicable.
  1. Balanced revenue/Expenditure ratio.
  2. Not applicable.
  3. Not applicable.


Monitoring Protocol:

Municipalities in East Iceland will make this data available annually.

Changes of indicator

At the initiative's annual meeting on May 3 2016 the following change was approved:

What is measured?

Text before change Text after change
  1. Changes of municipal income tax in selected municipalities
  2. Municipal income vs expenditure (including financial items)
  1. Changes of municipal income tax in selected municipalities
  2. Municipal income vs expenditure (including financial items)
  3. Municipal gross margin in East Iceland
  4. Municipal debt level in East Iceland

Rationale for change: 

This indicator was discussed during teamwork session at the initiative's annual meeting 2015.  The conclusion was to keep criterions a and b unchanged but add municipal gross margin and municipal debt.


It was decided in the forth phase of the initiative to change the numbers of the sustainability indicators.  This indicator was originally number 15.1 and is referenced as 15.1 in early documents of the project.


The criterion for part a was originally defined as:  "The ratio of total municipal revenue that came from the construction and operation of Fljótsdalsstöð power plant and Fjarðaál smelter".  When monitoring started in 2005 the criterion was changed to "Changes of municipal income tax in selected municipalities".  The reason was that information was unavailable for the former criterion but the revised one is available in yearbooks of municipalities.

Rationale for Indicator Selection


The Fjardaal and Karahnjukar projects will likely increase revenues from municipalities through increased income and property taxes from direct and indirect employment in the area.

The municipalities' expenditure, however, will also likely increase as the additional employees, their families, and others attracted to the local area require municipal services.

The main services which must be discharged by the municipalities according to Icelandic law are:

  • Social services
  • Technical services
  • Education, culture, sports and recreation
  • Infrastructure, environment, and planning
  • Operation of harbors (where appropriate)
  • Water works, district heating systems, and other utilities


Baseline

Municipality in East Iceland: Income and cost 2002


In this order: Municipality, income, cost, ratio of income and cost.

Source: Samband íslenskra sveitarfélaga from http://wayback.vefsafn.is/wayback/20070502142513/http://www.samband.is/files.asp?ID=1225

Baseline in current form of Municipalities

Source: Icelandic Association of Local Authorities http://wayback.vefsafn.is/wayback/20050629160831/http://www.samband.is/files/%7B700197D0-565E-49E4-BA73-5FF51E63DD02%7D_Bls_80-175.pdf