It often happens that money can buy happiness, after all, at least when we look at people's satisfaction with their living environment and the services provided by the local government. Rich municipalities keep attracting new residents, but the regions that are losing people and becoming poorer are not able to help themselves, writes Põim Kama.

15,248 people were living in Harku Municipality near Tallinn at the start of the year. The total budget of the municipality for this year is 34.7 million euros and it intends to spend the most on education and social affairs, including the establishment of new school places to accommodate the children of the families moving to the municipality from Tallinn as a result of the urban sprawl.

15,549 people live in Valga Municipality at the other end of Estonia and the total budget of the municipality this year is 21.1 million euros. This municipality also spends the lion's share of its budget on the provision of social services and education, but the pressure there is the opposite of that in Harku – while one new school building after another is built in the pastures around Tallinn and there are still not enough of them, the number of students in the south decreases year after year and maintaining schools is increasingly difficult.

Although the two municipalities are almost equal in terms of their populations, Harku is growing while Valga is shrinking. Also, Harku's budget is bigger by 13.6 million euros, even though they have to provide services to the same number of people. The average gross income of a worker living in Harku is 1708.6 euros per month, but a resident of Valga earns 1035.7 euros per month on average. One of the municipalities is rich, the other is poor.

Money and satisfaction

There is probably no point in comparing these municipalities in terms of where life is more beautiful and people are happier. Roads and streets are in better condition, schools and nursery schools are more beautiful, the salaries of teachers are higher and so on in municipalities where better services are provided and bigger investments are made. Why compare the incomparable?

However, it seems that the Ministry of Finance has deemed it necessary because the new online environment 'My local government' is all about such comparisons. 16 fields of the principal activities of local governments have been assessed, the satisfaction of residents has been surveyed and the connection of the latter to income have been assessed on the basis of thorough methodology. The results are not surprising – life in Harku really is better than life in Valga.

Confusion is not created by the results of the thorough survey, but by its purpose and application. The 'My local government' website says that better local services throughout Estonia are the goal of the ministry and in order to achieve this, the website gives an overview of the situation in each local government so that they can be compared with other local governments. The application would obviously be useful if the reason a local government lags behind others is that it really has no idea where it hasn't been able to keep up with the others and what the others are doing to get better results.

However, local governments generally know pretty well what they don't have money for and these national rankings humiliate poorer municipalities. Especially the municipalities in the hinterland that have to ensure equivalent services to their remaining population irrespective of their budgets decreasing year after year as a result of people moving to the capital.

Improving the situation is up to the state, not local governments.

Choosing what can and cannot be done within the scope of a budget is becoming increasingly more difficult and turning off the taps increases the dissatisfaction with the municipality government and the living environment. Dissatisfaction leads to political instability in municipalities, which in turn results in a lack of consistency in important decisions.

Add low wages to this and it's no wonder that the people of Valga dream about the lifestyle of Harku and move north if the opportunity presents itself. Who doesn't want to live better! The recently published Human Development Report 2019/2020 clearly indicated that only the population of Tallinn and Harju County is growing and the rest of Estonia, both cities and rural areas, is shrinking. Money moves with people and the departure of money from a region reduces the possibilities of local governments to offer a good living environment to its residents.

There is nothing that the shrinking and increasingly poorer municipalities can do to improve their situation because regional differences are not looked upon favourably in the regional policy of Estonia and the locals are not trusted to make their own decisions. Thus, the options of local governments for earning income and putting more money in their coffers are rather limited, although the establishment of local taxes or the creation of special conditions to attract investments could be the saving grace in the case of an innovative approach.

No need to fear regional differences

People in Valga joked about the profitability of establishing a toll on the short section of the road by the border, which was passed by cars from Tartu and Pärnu heading to Latvia when the alcohol trade by the border was at its peak.

The effective taxation system gives local governments no freedom to decide which taxes they could collect locally or which taxes they could abolish in order to boost business or which of them they could collect at a rate lower than the national average to create a competitive advantage for the region.

However, as the way Estonia is governed is centred around Tallinn, it's no wonder that all benefits and people move there. Policies are developed in a centralised manner and all local governments are regarded as identical, although life and needs in Harku and Valga are just as different as, say, in Ruhnu and Jõhvi. The absence of the right to decide for themselves is the reason why municipalities in the hinterland fall victim to their conditions.

In summer, Minister of Public Administration Jaak Aab initiated an amendment of the Local Government Organisation Act, and the plan is to disassemble and update the act for the first time in almost thirty years.

Apparently, one of the reasons of the audit is to give local governments, which became bigger and more capable after the administrative reform, more opportunities to better organise their lives. However, the Act cannot be viewed separately from the other acts that have an impact on the subsistence of local governments, e.g. the taxation system.

Regional policy as a whole needs a new and fresh approach because the different regions of Estonia need more flexibility and freedom to shape their own future. Only then do we have reason to prepare rankings that indicate who copes with this and how.