Local government in Finland is based on local self-government by the people. The Finnish Constitution safeguards the central features of local self-government:
- Residents elect the supreme decision-making body, the municipal council.
- The council has the general decision-making authority in local affairs. In addition, local authorities have certain specified responsibilities.
- Local authorities have the power to make financial decisions, based on their right to levy taxes.
The Local Government Act governs how municipalities may organise their administration. The Act recognises the diversity of municipalities and secures the residents’ welfare in a democratic manner.
How local authorities work
The Finnish system of local authority management is characterised by division into political and professional management.
Local authorities can organise municipal administration relatively freely. Each municipality must have a municipal council, a local executive and an auditing committee for auditing municipal administration and finance. Local authorities may set up also other decision-making bodies, for example a school management board, an equality commission and a personnel sub-committee.
The most senior position in a municipality is either that of chief executive or mayor. Whereas the chief executive is a local government officer and not a member of the local council, the mayor is chosen from among local councillors. Most Finnish municipalities have a chief executive. At present, two municipalities, the city of Tampere and its neighbouring municipality of Pirkkala, are led by a mayor; in addition, the city of Helsinki and the municipality of Tuusula have made a decision to adopt the mayor model. When the Finnish Local Government Act was reformed in 2015, a decision was made still not to permit a direct election of a mayor by local residents.
The municipal council expresses the will of the residents. It is responsible for the municipality’s activities and finances and exercises the municipality’s power of decision. The council has a strategic leadership role in determining the municipality’s long-term objectives and goals.
The local executive is responsible for the municipality’s administration and financial management. It prepares and implements the municipal council’s decisions and oversees their legality. The local executive’s responsibilities are more practical than those of the municipal council. In Finland, local executives enjoy a high administrative status. A local executive’s or a city executive’s chairperson and deputy chairpersons may serve full-time or part-time.
The municipal council may set up committees to operate under the local executive or, alternatively, standing committees for managing functions of a permanent nature. The responsibilities of the committees may include social and health care services, education, urban planning, the environment, and cultural and leisure services.
The chief executive works subordinate to the local executive as the head of municipal administration, financial management and other activities.
Finland believes in equal representation and participation of both genders in municipal decision-making. According to gender quota rules, at least 40 per cent of the members of municipal decision-making bodies must be women, with the exception of councillors, who are elected in local elections. Women account for 33 per cent of municipal councillors.
Local authority corporation
The municipality and its subsidiaries together constitute a local authority corporation, in which the municipality exercises control. A local authority corporation may also include entities in which a local authority subsidiary exercises control. The entities belonging to a local authority corporation may comprise limited liability companies, associations and foundations. The municipality must prepare consolidated financial statements and incorporate these in its financial statements.
The management of a local authority corporation consists of the local executive, the chief executive or the mayor, together with the other decision-making bodies, local government officers and elected officials specified in the rules of procedure. The local authority corporation's management are responsible for overseeing the operation and for arranging supervision. The management’s actions are steered by the local council.
Local government finances
Finnish local authorities spent EUR 42 billion in 2016 on arranging services and promoting the welfare of residents. Social and health care services account for almost a half of the total expenditure and education and culture almost one third.
Local authorities finance their services with taxes, central government transfers, various fees and charges, and sales revenues. Local income tax paid by residents, real estate tax and a share of corporate tax account for almost half of all municipal revenue. Each local authority decides independently on its income tax rate. The average local tax rate is 19.91 per cent of taxable income.
Fees and charges account for about a quarter of municipal revenue. Most of the customer charges are collected for services such as water supply, waste disposal, power supply and public transport. Just under one tenth of social welfare and health expenditure is covered through customer and patient charges. Basic education is free.
The central government participates in the financing of statutory local services by granting transfers to local government. The central government transfer system evens out financial inequalities between local authorities and ensures equal access to services throughout the country. Central government transfers account for less than one-fifth of all municipal revenue.
Local self-government is an essential element of municipal finances. Local authorities have substantial freedom to choose how they finance their services and investments.
Local elections every four years
Local councillors and deputy councillors are elected to the local council in local elections held within the municipality every four years. The next local elections to be held on mainland Finland will be on 9 April 2017.
The new Local Government Act (Section 16) gives the local council more freedom to decide the council size. Whereas the old Local Government Act of 1995 tied the number of councillors to the municipality’s population, the municipality can now decide whether to maintain, increase or reduce the number of local councillors. The number of councillors elected in the 2012 local elections was 9,674. In the upcoming 2017 elections the number of councillors is likely to decrease.
Citizens of Finland and of other European Union Member States and of Iceland and of Norway who are at least 18 years old on the day of the election and whose municipality of residence is the municipality in question, have the right to vote in local elections. Other foreigners meeting these requirements also have the right to vote in local elections if they have had a municipality of residence in Finland for two years. Candidates may be nominated by political parties and constituency associations.
There has been a significant decline in the voting turnout in local elections in Finland in the last few decades. The local elections of 2000 saw the lowest voting turnout ever (55.9%). There was some improvement in this respect in the 2004 elections, when 58.6% of eligible voters used their vote. In the 2008 elections, the voting turnout was 61.3% and 58.3% in the 2012 elections.
Voting turnout (%) in Finnish local elections:
Elections 1992 70.9%
Elections 1996 61.3%
Elections 2000 55.9%
Elections 2004 58.6%
Elections 2008 61.3%
Elections 2012 58.3%.