Reykjavík Mayor Dagur B. Eggertsson told RÚV the city will not resort to service cuts or price hikes as a result of its operational deficit. He adds that construction and urban consolidation in Reykjavík will yield profits in the coming years. Socialist Party councillor Sanna Magdalena Mörtudóttir says the city’s new budget does not address poverty or the ongoing housing crisis while other councillors say the city’s debt is too large.
The City of Reykjavík will be operated with an ISK 3.4 billion [$26.1 million, €22.6 million] deficit next year, according to the budget presented by city authorities earlier this week. This is the third year in a row the city runs on a deficit. Its debt is expected to increase by ISK 24 billion [$185 million, €160 million] and will be almost ISK 174 billion [$1.34 billion, €1.16 billion] by the end of next year. That applies to the city’s operations that are funded by taxes, or the so-called “A” section of city operations. The “B” section, which includes businesses in part or whole ownership of the city, such as Reykjavík Energy (OR), Associated Icelandic Ports (Faxaflóahafnir), Sopra bs. and Strætó bs., among others, is projected to produce a surplus of ISK 8.6 billion [$66.1 million, €57.2 million].
Long-term loans for construction projects
“We are going to grow out of this problem and our plans allow for that. We have low tariffs [compared to other municipalities], especially for those who have less, and we intend to keep it that way,” stated Dagur. He added that the city’s debt was nothing to worry about. “As a percentage of revenue, it is far south of something to be concerned about and we are in good standing compared to other municipalities.” According to Dagur, part of the city’s debt is due to long-term construction projects including the building of new neighbourhoods. “We take part of it as a loan and the development pays for it over a long period. That’s just sensible economic management and responsible financial management, as we have done here in recent years.”
Social housing and public transit overlooked
Socialist Party councillor Sanna Magdalena Mörtudóttir wants the city to increase its revenue by taxing capital income, “to ensure that we can build up the good service that people have the right to receive.” She criticised the budget’s housing plan, which she stated did not address the waiting list for social housing, which was around 850 people long. “This budget does not account for eradicating poverty, eradicating this housing crisis that people are experiencing here. And that’s something that is unacceptable.”
Both People’s Party councillor Kolbrún Baldursdóttir and Independence Party councillor Eyþór Arnalds expressed concern at the city’s rising level of debt, with Eyþór stating that the budget did not account for funding the Borgarlína rapid bus transit line, though its construction is scheduled to begin soon.