Bright times ahead

The budget provides for an operating surplus of just over 360 million króna for Parts A and B. The projected operating cash flow for Parts A and B combined is 3.3 billion króna, which is approximately 151% of the municipality's total revenues. Increased operating cash flow is a fundamental prerequisite for successfully reducing the town's debt.

Operational improvements

 
„This plan has brought the underlying problems in the council's operations under control.“ says Haraldur L. Haraldsson, Mayor of Hafnarfjörður. In a newly approved plan, the emphasis is on maintaining an unchanged level of service in the municipality. Childcare fees will remain unchanged for the second year running. Council Tax will increase, offset by a reduction in water and sewerage charges, so that the overall burden on residents will not increase. This also increases the property tax discount for the elderly and the disabled. By the end of 2015, the municipality's foreign debt will have been largely repaid, and in the new year, almost all of its debt will be in Icelandic krónur. 

,This budget sets out clear objectives for debt repayment and streamlining, which will deliver significant improvements to the council's operations. It is therefore vital that the plan is followed in every respect. This lays the foundation for the financial recovery of the municipality, from which all residents will ultimately benefit.“ says Rósa Guðbjartsdóttir, chair of the town council.

 


Key findings of the 2016 budget

Hafnarfjörður is the third largest municipality in the country with total expenditure of around 21.9 billion króna. Estimated wages and salaries amount to approximately 10.6 billion krónur, and finance costs to 2.1 billion krónur, or equivalent to 9.61% of the municipality's total revenue. 

• The operating result for Parts A and B is a positive 361 million króna, and the operating result for Part A is a positive 14.9 million króna, which is a turnaround from the previous year's forecast, where the result was a negative 333 million króna.
• The Group's total assets are estimated at approximately 47.9 billion króna at the end of 2016. Liabilities and commitments are estimated at approximately 40.3 billion króna and equity at approximately 7.6 billion króna.
• Projected operating cash flow from Section A is approximately 2.4 billion króna, and a combined total for Sections A and B is 3.3 billion króna, which is nearly 151% of total revenue.
• In 2016, it is planned to repay older loans and liabilities amounting to 600-800 million króna.
• Estimated investments for the year are 925 million króna and estimated sales of industrial plots are 200 million króna.
• A tariff indexation of 4.5% is generally expected for 2016. However, the nursery stay fee will remain unchanged.

Strong emphasis on education and upbringing

Funding for education and childcare increases by 644 million króna year-on-year, or by 71%. The emphasis will continue to be on improved academic achievement in literacy and numeracy, as well as ongoing technological development in nurseries and primary schools. The number of primary school pupils is increasing by 103 year-on-year, while the number of nursery school children is decreasing by 83, based on an unchanged entry age, and this will be addressed. It is expected that all children born in March 2015 or earlier will be able to start nursery school in autumn 2016. There are large year groups in the younger years of primary school, and accordingly, attendance at after-school clubs has increased. Next year, up to 80 more children are expected to use the service, which requires an increase in staff. The funding for the subsidy of participation fees will increase. Parents/guardians can now receive a subsidy for their children's sports and leisure activities in other local authorities, which is a new development. Pupils in Years 9 to 11 will receive a pay rise of around 13% for their work at the Work Experience Programme. There will also be a greater emphasis on prevention, including through collaboration with Samtökin 78 and the Red Cross.

„
By systematically reducing the town's interest costs, more funds will be available for direct services to residents. In this way, the 2016 plan puts us on track towards our goal of providing residents of Hafnarfjörður with increased services for a lower cost. This is therefore, first and foremost, a forward-thinking and cost-effective plan.“ says Guðlaug Kristjánsdóttir, Mayor of Hafnarfjörður.

Attachments to the press release

Hafnarfjörður – Policy Area Overview 2016–2019

Explanatory Memorandum to the 2016–2019 Financial Plan

Hafnarfjörður – Financial Plan 2016–2019

Hafnarfjörður – Budget 2016