Public participation in municipal economic planning

The outlook for municipal economies is changing due to demographic changes and the establishment of wellbeing services counties. Together with local authorities, we are experimenting ways to facilitate economic planning through public involvement.

What is it about?

The tasks and finances of municipalities are undergoing major changes. With the establishment of wellbeing services counties, municipalities are no longer responsible for organising social and health care services and the fire and rescue services. Nevertheless, population ageing and regional concentration are eroding municipal tax revenue and further differentiating service needs.

On the other hand, this change is also an opportunity for municipalities. With sufficient will, municipalities can specialise based on their strengths, build new partnerships and renew their ways of working.

Involving residents in municipal economic planning and evaluation can, at best, lead to better decision-making, as it encourages them to examine the usefulness of investments and consider different alternative solutions. Public trust is strengthened when people can see how the budget relates to the goals decided. And decision-makers will have a clearer basis for making choices.

What do we do?

The aim of the project is to collate experiences of residents’ participation in municipal finances. Sitra will helps the municipalities selected for the project to experiment with new ways to involve the public in municipal economic planning, identifying and evaluating their goals, and increasing the effectiveness of decision-making.

The experiments can be linked to financial planning or its evaluation, such as in the preparation of budgetary frames, combined budgets, balancing solutions or evaluation reports or in some other interesting way.

We try the following approaches in the beginning:

The experiments involve setting up a citizens’ panel of randomly selected residents. The panel uses sufficient background information to consider various alternatives and make recommendations for the different stages of the budget process. The recommendations will be taken forward in the budget preparation process and published for the information for all municipal residents.

Youth councils experiment with shadow budgeting and give their opinions in the municipal budget process. These opinions will also be included in the budget preparation process and published.

The audit committees responsible for municipal evaluation can be invited to participate in the planning of the local government budget. This will enable them to assess the realisation of the local government strategy and budget in real time.

The experiments are based on outcome based budgeting (outcome based budgeting). This identifies the desired outcomes and the investments used to pursue them before creating the budget. From the perspective of public participation, this is a motivating level of scrutiny.

After the experiments, we will share the best practices, tools and lessons learned with all municipalities.

Who is involved?

Sitra funds the experiments of the municipalities and the Union of Local Youth Councils in Finland. We are currently looking for two municipalities in different parts of the country with an agile development approach to participate in the experiment.

In the project, we will also bring together a broad network of organisations related to the planning of public finances that will develop models and practices and determine the necessary follow-up.

Where are we now?

The funding application period for municipalities starts in March. We will start the experiments with the municipalities and youth councils during the spring. The project will end in late 2023.