The financial problems of the Valka municipality have reached the government level. Authorities and the Ministry of Finance are arguing about the causes of the crisis, but the situation has already led to payment delays, rising debts, and constant pressure from service providers.
Valka has become the second municipality in Latvia, after Rezekne, whose financial situation had to be discussed at the government level, writes Latvijas Avīze.
According to the Ministry of Finance, the total liabilities of the Valka municipality have exceeded 2 million euros. The municipality regularly delays payments of bills and taxes, and some debts need to be settled in the near future.
The chairman of the Valka municipality council, Vents Armands Krauklis, acknowledged that the situation remains extremely tense. According to him, service providers demand payment of bills daily, and the municipality's phones are "ringing off the hook."
Unlike Rezekne, where the crisis developed rapidly, Valka's financial problems have accumulated over the years. The Ministry of Finance has been monitoring the situation since 2024, when the municipality had to take a short-term loan from the state to stabilize its budget.
One of the main reasons for the crisis, according to the Ministry of Finance, is the excessively low tariffs for heating and water supply. According to the ministry, the municipal enterprise Utilitas Valka effectively subsidizes residents, as the fees for services do not cover actual costs.
The situation with the population's debts looks particularly severe. Of more than 2 million euros in liabilities, over 1 million consists of unpaid bills from residents for heating and water.
Importantly, the problem concerns not only the municipality's budget. If debts continue to grow, it could affect the stability of public services and the financial situation of municipal enterprises.
The Valka leadership disagrees with the Ministry of Finance's assessment. They claim that about 280 thousand euros are old debts from a decade ago, which are practically impossible to recover.
The municipality plans to gradually write off and reduce problematic debt by about 50 thousand euros per year.
However, the Ministry of Finance points out that more than 700 thousand euros of the debts are relatively new — with delays of up to 30 days. In the ministry's opinion, this indicates not old problems, but a continuing deterioration in payment discipline and financial situation.
In an attempt to close part of its obligations this year, the municipality sold a boiler house and received almost half a million euros. But this amount was only enough for current payments and taxes — the total volume of debts has hardly decreased.
Against the backdrop of rising utility costs and a challenging economic situation, Valka is becoming yet another example of how the financial problems of small municipalities gradually escalate to the state level.
Now the government and local authorities need to find a balance between socially acceptable tariffs and the actual ability of the utility system to operate without constant debts.
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