To find a solution to the prolonged financial problems of the Valka region, the Ministry of Finance urges the local government to change its approach to budget and finance management by June 1, settle with creditors, and pay taxes, public media report.
The local government believes that the "homework" is done - a strict savings regime has been introduced, and finding additional opportunities to cut expenses is difficult.
What underlies the financial problems of the Valka region, which have been ongoing for several years? These questions have been raised by the local government repeatedly, and according to the chairman of the council, Vents Armands Krauklis, it is unclear why they are not addressed in the Ministry of Finance's report.
"The Ministry of Finance has used data very selectively and has essentially ignored the main issues that it is well aware of," Krauklis stated.
In terms of population, the Valka region is one of the smallest in Latvia, and the situation is further worsened by the fact that some residents are registered on the Estonian side, which significantly affects the income tax revenues.
"The number of residents used as the basis for calculation is 8,280, but if we add those registered in Estonia, it totals 9,680," explained Ilze Grandava, head of the accounting and finance department of the local government.
Another problem is that many residents of Valka, about 500 people, work in Estonia, and their taxes remain in the neighboring country.
"19% of the working-age population works in another country and does not bring any income to the local government. This is a unique situation," Krauklis noted.
The local government also emphasizes that a sufficiently strict savings regime has already been introduced, and further cuts in expenses are challenging.
"If we are told to cut something, we essentially have nothing left to cut. All institutions and departments have effectively transitioned to survival budgets. Positions have been reduced, vacancies remain unfilled, partly because no one responds to such salaries. It is very difficult to find anything else to save on," Grandava said.
However, the Ministry of Finance holds a different opinion. The director of the department for monitoring the financial activities of local governments and funding, Inta Komissare, stated that at this time, the ministry does not see significant improvements in the local government. One of the conclusions of the Ministry of Finance's report is the disorganized provision of utility services in the Valka region, which leads to losses for the local government, as well as the fact that it has not collected debts from residents for utility payments for a long time.
