According to the City of Helsinki’s financial statements for 2021, the city continued to invest heavily in the needs of the growing city. The investment expenditure in 2021 was €890 million, which was €27 million less than in the comparable situation of the previous year. The investment expenditure was the second highest of all time.
In recent years, the city has invested especially in the construction projects of the Education Division, in the preconstruction of new residential areas and in the new construction and improvement of streets and traffic routes.
“The main theme in our city strategy is the growth of the city. It is essential to invest in the city’s growth in order to pave the way for Helsinki’s chances of success, which is why Helsinki will continue to make bold investments,” says Mayor Juhana Vartiainen.
The cash flow from operations and investments, which is a key indicator of the city’s financial situation, was negative by €90 million, and this deficit was a result of the high investment levels. Due to the high level of investments, the city’s cash flow from operations and investments is showing a downward trend. The negative cash flow from operations and investments causes a situation where it is necessary to cover the expenditure either with the available cash funds or by taking out a loan.
In 2021, the internal financing rate of the investments was 88%, compared to 85% in 2020. It is in line with the level of other major cities in Finland. The internal financing rate of the investments is also showing a downward trend in the city’s financial balance, because while the level of investments has risen, internal financing has not been able to keep up with the investments.
At the end of 2021, the city’s loan portfolio amounted to €913 million, compared to €992 million at the end of 2020.
Housing construction remained lively in Helsinki also in 2021. The number of dwellings started and completed exceeded the targets: 7,105 dwellings were completed and the construction of 7,350 dwellings was started in 2021. Helsinki’s Implementation Programme on Housing and Related Land Use indicates an annual housing production target of 7,000 new dwellings. Starting from 2023, the annual target will be 8,000 dwellings.
Profit for the financial year weakened from the previous year
The city’s profit for the financial year was €350 million, which was nearly €150 million less than in the previous year. Looking back over several recent years, the profit for 2021 was at the average level, but in proportion to the actual level of investments, somewhat weaker than in the previous years.
The 2021 annual contribution margin (the internal financing available after running costs have been covered) was better than the budget as tax revenues exceeded the budget. The annual contribution margin was €757 million. Tax revenues exceeded the budget by almost €200 million.
“The city has to finance its annual operating expenditure and major annual investments with the tax and other revenues. The surplus in the income statement will be used to finance the city’s investments,” says Mayor Vartiainen.
In 2021, the city’s operating expenditure was €5.0 billion. The operating expenditure exceeds the budget by €219 million and increased by 7.8% compared to the previous year. The corresponding increase in 2020 was 3.6%. The overrun was mainly caused by the direct costs of the COVID-19 pandemic within the Social Services and Health Care Division. The State partially compensated these costs by granting state aids, which Helsinki received in the total amount of €175 million. Taking into account the COVID-19 compensations in terms of corporation taxes and state subsidies, the impact of COVID-19 on the city’s economy was balanced in 2021.
The city’s operating income was €1.5 billion in 2021. The operating income increased from the previous year and also exceeded the budget. The income overrun was mostly due to the state aids allocated to the Social Services and Health Care Division to cover the direct costs of the COVID-19 pandemic and border health safety costs. In 2021, the city’s total income, including municipal enterprises and funds, totalled €5.8 billion.
“Helsinki’s economy has been managed responsibly on a long-term basis, which allows us to react to various challenges with our growth and rationalised use of resources. Through growth, we are able to strengthen Helsinki’s competitiveness, appeal and financial position,” says Mayor Juhana Vartiainen.
Key figures 2021
- Population 658,864
- Jobs 453,600
- Annual contribution margin €757 million
- Internal financing rate of investments 88%
- Operating expenditure €5.0 billion
- Loans/resident €1,386
- Investments €890 million
- Completed dwellings 7,105
Schedule for the processing of the 2021 financial statements
The City Board will process the financial statements on Monday, 21 March 2022. The City Council will process the financial statements on 22 June 2022.
The City of Helsinki’s financial statements for 2021 (in Finnish)