7164-224-0

The Economy Report.

On Swedish municipal and county council finances – November 2006

Information concerning the content of the report: Maj-Lis Ă…kerlund phone +46-8-452 77 54 Per Sedigh phone +46-8-452 7743

Swedish Association of Local Authorities and Regions Department of Economy and Governance, Section for Economic Analysis SE-118 82 Stockholm | Visitors Hornsgatan 20 Phone +46-8-452 7747 | Fax +46-8-452 72 26 info@skl.se, www.skl.se Š Sveriges Kommuner och Landsting 1st edition, January 2007 Graphic form & production: Elisabet Jonsson Translation: Ian MacArthur, Elisabet Jonsson, Anders Brunstedt.

Cover illustration: Jan Olsson Form & Illustration AB. Printers: KLF Digitalttryck, Stockholm.

Fonts: BerlingNova och Charlotte Sans SKL. Paper: Xerox Colortech Natural White 100 & 200 gr (cover).

ISBN: 978-91-7164-224-0 (edition in Swedish: 978-91-7164-146-5, ISSN: 1653-0853 )

Foreword Since the beginning of 2005 the Swedish Association of Local Authorities and the Swedish Federation of County Councils cooperate under the name »the Swedish Association of Local Authorities and Regions« (salar). This is the fourth issue of The Economy report. The Report is published twice a year.

The Economy Report deals with the development of the economy and with the financial situation of the whole local government sector and of county councils and municipalities, both now and over the coming few years.

In this issue we stress the importance of a long-term approach and of safeguarding local self-government.

Where possible we have taken account of the economic and financial implications of the 2007 Government Budget Bill in our calculations. However, further economic analyses of this Bill will be necessary.

The present report has been written by economists at the salar Section for Economic Analysis. The Summary (supplemented with some tables and diagrams from the main report) and the Annex are published here as a separate English document. Ian MacArthur has translated the Summary, following slight revisions by Anders Brunstedt and Elisabet Jonsson.

December, 2006 Maj-Lis Åkerlund The Swedish Association of Local Authorities and Regions, Section for Economic Analysis

On Swedish municipal and county council finances

1

Summary and conclusions

Contents Summary and conclusions ........................................................................................ 3 Long-term approach necessary for good finances ........................................ 3 Good central government finances important to municipalities and county councils .................................................................... 4 Local self-government is good for the economy .......................................... 4 Good economic situation ........................................................................................ 5 Municipalities .............................................................................................................. 6 County councils .......................................................................................................... 7 Sharp downturn at the end of the period ........................................................ 8 Annex ................................................................................................................................ 9 An aggregate picture of municipalities and county councils ................ 9 Breakdown of costs .................................................................................................... 11 Breakdown of revenue .............................................................................................. 11 Breakdown of income from fees and charges .............................................. 12 Breakdown of specific government grants .................................................... 13

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the Economy Report. November 2006

Summary and conclusions

Summary and conclusions In 2005 both municipalities and county councils reported the best net income for many years. Net income is expected to be even better in 2006 and amount to more than sek 19 billion – an improvement of sek 7 billion. The good state of the economy will result in strong employment growth this year and next year, which means that the tax base will grow at good pace. This will continue in succeeding years. However, net income will turn sharply downwards at the end of the period, mainly because inflation erodes the value of central government grants. This can be countered by increasing the government grants or by municipalities and county councils taking action to increase the efficiency of activities and restrict the development of costs.

Long-term approach necessary for good finances

SEK billion

Even though net income for 2005 and 2006 has been good, we must not forget that a certain surplus is needed to meet the requirement for healthy finances. Net income of sek 15–20 billion in activities turning over more than sek 600 billion is not as much as it sounds. sek 15 billion corresponds to 2.7 per cent of tax revenue and general government grants. The appropriate size of net income varies with the starting point, the financial/economic situation and the future prospects of the individual county council and the individual municipality. For municipalities and for county councils as a whole we generally use the rule of thumb that net income has to Diagram 18 • Aggregate net income for municipalities and county counamount to 2 per cent of tax revenue and general go- cils excluding extraordinary items, 1997–2010 vernment grants for it to be considered that healthy SEK billion finances have been achieved.

Total Adjusted Municipalities County gov grants councils The main arguments for positive net income are 20 18 that the present generation must meet its own costs, 16 that allocations are needed for future pensions, the 14 12 need to secure the value of assets (depreciation does 10 8 not cover price and quality increases for new acqui6 sitions), and self-financing of investments. More4 2 over, the budget should contain a buffer for unfore0 –2 seen events.

–4 –6 –8 –10

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Source: Swedish Association of Local Authorities and Regions.

On Swedish municipal and county council finances

3

Summary and conclusions

Good central government finances important to municipalities and county councils One important factor for municipalities and county councils is that central government has its finances in good order. This reduces the risk for sudden state cuts. The most recent calculations suggest a good situation for central government finances. The estimated surpluses in coming years are expected to exceed by a good margin what is needed to achieve the target of long-term net lending amounting to 2 per cent of gdp. We therefore expect central government to adjust general grants upwards in line with the development of the tax base.

For its part, central government must also provide a stable basis for local authority planning in the form of good long-term planning both concerning the revenue side and in the event of changes that impact on local government activities. It goes without saying that the local government financing principle must be applied fully.

Local self-government is good for the economy The Local Government Act requires municipalities and county councils to formulate financial objectives and guidelines for activities of importance for healthy finances. This emphasises the importance of running activities in a cost-effective manner and of having a match between resources and the scale and ambitions of activities. This is why it is important that central government exercises control at general level through national objectives – and not with detailed regulation and targeted government grants. The body best placed to develop these activities is the body that is responsible, has the best knowledge about them and is closest to citizens. This is why local self-government and the local government financing principle should be safeguarded.

Our questionnaire shows that in a financial perspective the most important aspects of self-government are the right of taxation, the local government financing principle, general government grants, a stable basis for local authority planning and securing the value of government grants.

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the Economy Report. November 2006

Summary and conclusions

Good economic situation Growth in the international economy is expected to culminate this year and to slow down gradually in 2007. In the United States a slow-down already began in the second and third quarters as a result of a significant weakening of the housing market. In Europe, which is later in the business cycle, growth is expected to exceed earlier expectations, especially in Germany. Further sharp increases in oil prices may lead to rising inflationary expectations, prices increases and therefore higher interest rates. The result may then be the moderation of economic growth at the same time as demand turns downwards.

In 2006 growth Sweden is expected to be the highest for the past six years. Next year gdp growth is expected to moderate but remain good. Employment is expected to increase strongly this year and next year as a result of the good economic situation.

During the period 2006–2010 the tax base is expected to grow by more than 4 per cent per year.

Table 3 • GDP supply and demand 2005–2010 Volume change, per cent on previous year 2005 2006 2007 2008 2009 2010 GDP 2.7 Imports 7.3 Supply 4.0 Household consumption 2.4 Public consumption 0.7 Central govt –1.5 Local govt 1.6 Gross fix’d capital formation 8.5 Changes in stocks* – 0.2 Exports 6.4 Demand 4.0

4.1 9.1 5.6 3.9 1.5 0.5 1.9 7.8 0.0 8.7 5.6

3.3 8.9 4.9 4.1 1.0 0.3 1.3 5.4 0.1 7.4 4.9

2.7 7.1 4.0 3.1 0.8 0.3 1.0 4.0 0.0 6.5 4.0

2.3 6.0 3.5 2.5 0.7 0.3 0.8 4.0 0.0 5.5 3.5

2.0 5.2 3.1 2.3 0.7 0.3 0.9 4.0 0.0 4.5 3.1

*Change in per cent of gdp in the previous year.

Source: Statistics Sweden, National Institute of Economic Research and own calculations.

Table 7 • Number of employees per sector 2005–2010 Thousand employees and annual percentage change 2005 level

Private sector Municipalities County councils Central gov’t Total

3,025.2 827.3 262.8 240.7 4,356.0

2006 2007 2008 Percentage change

2.2 1.0 0.7 1.4 1.9

1.6 1.2 1.5 0.8 1.5

1.4 0.5 1.1 0.0 1.1

2009

2010

2005 –2010

0.8 0.5 0.9 0.0 0.7

0.5 0.5 1.2 0.0 0.5

1.3 0.7 1.1 0.4 1.1

Source: Statistics Sweden and own forecast.

On Swedish municipal and county council finances

5

Summary and conclusions

Diagram 13 • Volume trend in tax-financed activities, 2005–2006 Index 2005 = 100 Compulsory school

118

Upper seconddary school

Child care

Other activities

Total

Elderly care

Care of disabled

Index

112 106 100 94 88

2005

2006

2007

2008

2009

2010

Source: Swedish Association of Local Authorities and Regions.

Municipalities Net income for municipalities improved sharply in 2005. Net income exclusive of extraordinary items amounted to sek 9 billion.

We calculate the aggregate volume effect of demography, reforms and labour market policy at 1.7 per cent in 2006. The volume increase in 2006–2010 is 0.9 per cent on average.

For 2006 our assessments lead to very good net income – of the order of sek 14 billion. In subsequent years net income is expected to show clear deterioration. However, if the value of government grants is secured we expect that aggregate net income for municipalities will reach the rule-of-thumb level of 2 per cent of taxes and general grants.

Diagram 14 • Municipal net income 2006–2010 Percentage of taxes and general government grants Calculation

Adjusted gov grants 2009 and 2010

4,0 3,5

Per cent

3,0 2,5 2,0 1,5 1,0 0,5 0,0 2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

Source: Swedish Association of Local Authorities and Regions.

6

the Economy Report. November 2006

Summary and conclusions

Forecast 2006

3 2 1

Per cent

4

5

6

7

Net income 2005

Uppsala

Jönköping

Gävleborg

Kalmar

Halland

Dalarna

V:a Götaland

Blekinge

Stockholm

Västerbotten

Riket

Örebro

Kronoberg

Gotland

Östergötland

Jämtland

Värmland

Skåne

Sörmland

Västmanland

Västernorrland

Norrbotten

0

In 2005 county councils reported positive net income in aggregate, doing so for the first time since 1992. Net income amounted to sek 4.3 billion. The county councils have worked actively to develop their activities and keep cost increases down. But increased government grants and tax increases are also behind the positive trend in net income.

In the period 2006–2010 volume growth is relatively stable with an average of 1.8 per cent per year.

Our assessment is that in 2006 the county councils will report positive net income of more than sek 5 billion, which is in line with healthy finances.

We expect net income to also reach a reasonable level in 2007–2008 but to deteriorate sharply thereafter. In addition to an upward adjustment of government grants with the growth of the tax base, extensive action to improve efficiency will be required if net income is to achieve the rule-of-thumb level of 2 per cent of taxes and general grants.

Diagram 15 • Net income, 2005 accounts and forecast for 2006 Percentage of net costs

–3 –2 –1

County councils

Note: Stockholm refers to the affiliated county council companies. Östergötland according to the ”fully funded model” concerning pension liabilities. Gotland refers to the whole local authority (i.e. including municipal functions). Effects of the new Retirement Agreement, a lowering of interest rates as well as changes due to assumptions of a decreased death rate have been taken into account by the following county councils: Kalmar, Västernorrland, Västra Götaland and Västmanland.

The others have either not taken into account the new Retirement Agreement, or taken into account both the effects of the new Agreement as well as lowered interest rates.

Source: Swedish Association of Local Authorities and Regions.

Diagram 17 • County council net income 2000–2010 Percentage of taxes and general government grants Adjusted gov grants 2009 and 2010

Calculation

3 2

Per cent

1 0 –1 –2 –3 –4 –5 2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

Source: Swedish Association of Local Authorities and Regions.

On Swedish municipal and county council finances

7

Summary and conclusions

Sharp downturn at the end of the period Despite relatively favourable demography and the expectation of a good tax base development in coming years the economic situation already looks much worse in a few years. This also applies if general government grants are adjusted upwards with tax base growth. There is also some difference in the development of net income between municipalities and county councils. Demography-related volume growth is close to zero in municipalities but amounts to 0.7 per cent per year in county councils. In all the average volume growth in the period is 0.9 per cent in municipalities and 1.8 per cent in county councils. This leads to higher cost growth and a stronger deterioration of net income for county councils.

We can conclude that the present tax base is not sufficient for the local government welfare undertaking some years from now. The dialogue on welfare provision in the future therefore needs to be deepened and intensified.

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the Economy Report. November 2006

Annex The first part of this annex reports some key indicators and a number of tables and diagrams taken from the municipality and county council sections that have been added together here to give an overall picture. This is followed by the breakdown of costs and revenue for municipalities and county councils separately.

An aggregate picture of municipalities and county councils Table 23 • Key indicators for municipalities and county councils 2001–2007 Per cent and thousands

Average tax rate, % municipalities county councils Number of employees, thousands municipalities county councils

2001

2002

2003

2004

2005

2006

2007

30.54 20.57 9.97

30.52 20.53 9.99

31.17 20.70 10.47

31.51 20.80 10.71

31.60 20.84 10.76

31.59 20.83 10.76

31.56 20.78 10.78

1 068.9 1 080.5 1 088.5 1 088.3 1 090.1 1 100.4 1 114.1 814.4 829.0 833.2 825.3 827.3 835.8 845.5 254.5 251.5 255.3 263.0 262.8 264.6 268.6

Note: Average employment according to the National Accounts.

Source: Statistics Sweden.

Tabell 24 • Sammantagen resultaträkning åren 2005–2010 Miljarder kronor i löpande priser om inte annat anges Outcome 2005

Forecast 2006 2007

2008

123.8 –609.8 –19.3 –505.3

128 –638 –20 –529

132 –671 –20 –559

134 –698 –21 –585

136 –728 –22 –614

141 –762 –22 –643

Tax revenue 432.4 General gov’t grants and equalisation 82.4 Net financial income 3.7 Net income excl. of extraordin. items 13.2

459 87 3 19

473 93 3 10

494 98 3 10

516 98 3 4

540 99 3 –1

3.5

1.7

1.7

0.7

–0.1

3.3

7.0

8

6

Income of activities Expenses of activities Depreciation Net expenses of activities

Share of taxes and grants, %

2.6

General government grants adjusted upwards by tax base forecast Net income for the year after tax base adjustment 13.2 Share of taxes and grants, %

19

10

Calculation 2009 2010

10

2.6

3.5

1.7

1.7

1.2

1.0

Cost reduction to achieve 2 per cent 0.0 which corresponds to a volume decrease of or a tax increase of Net income for the year with the 2 per cent target 13.2

0.0

1.5 0.3% 10 öre

1.9 0.3% 12 öre

4.7 0.8% 28 öre

6.3 0.9 % 37 öre

19

11

12

12

13

Share of taxes and grants, %

3.5

2.0

2.0

2.0

2.0

2.6

Source: Statistics Sweden and Swedish Association of Local Authorities and Regions.

On Swedish municipal and county council finances

9

Annex

For the aggregate net income of municipalities and county councils, see diagram 18 on page 3.

Diagram 19 • Aggregate cost growth broken down by volume and price in municipalities and county councils 2002–2010 Per cent Volume

Price

6 5

Per cent

4 3 2 1 0 –1

2002

2003

2004

2005

2006

2007

2008

2009

2010

Source: Swedish Association of Local Authorities and Regions.

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the Economy Report. November 2006

Annex

Diagram 20 • Breakdown of municipalities’ costs for activities in 2005, ca SEK 410 billion Preschool services and school age child care 12.5 %

Other activities 15.4 % Commercial activities 5.8 %

Breakdown of costs Municipal and county council costs can be described in two ways: by breaking them down by activity and by breaking them down by cost type.

If costs are broken down by activity (diagrams 20 and 21) three conclusions can be drawn. First, the core activities of municipalities and county councils account for a considerable part of total costs. For municipalities, schools, health care and social services account for more than 75 per cent of costs. For county councils heath and medical services account for 90 per cent of costs.

In diagram 20 pharmaceutical benefits are included in the various activities.

Second, it is clear that a large part of municipal and county council costs are related to demographic factors, i.e. changes in age structure affect costs. This relationship is stronger for municipalities than for county councils.

Third, a large share of costs is regulated through legislation — acts and government ordinances – that restricts the scope for municipalities and county councils to reduce their costs when changes occur on the revenue side.

When costs are broken down by cost type (diagrams 22 and 23) it can be seen that the largest single cost type is personnel costs.

These costs account for 57 per cent of municipal resources and 50 per cent of county council resources. There are also staff-related costs in the parts of municipal and county council activities that are run by other entities on behalf of local governments. If these services are included, then the overall personnel-related costs for municipalities and county councils amount to 70 per cent and 65 per cent of total costs respectively. The remaining 30 and 35 per cent of costs mainly consist of costs for premises, purchases of goods and grants and transfers (mainly municipal costs for financial assistance, i.e. social assistance to individuals). The large share taken by personnel costs means that both the price and the volume of the workforce are crucial for total costs.

Breakdown of revenue How municipalities and county councils each finance their activities is shown in diagrams 24 and 25. Municipalities and county councils raise the main part of their revenue by themselves. Tax revenue, fees and charges and certain other revenues finance 80

Sources: For diagrams 20–30 the data for county councils come from the Swedish Association of Local Authorities and Regions and the data for municipalities come from Statistics Sweden.

On Swedish municipal and county council finances

Compulsory school 18.1 %

Individual & family care 4.4 % Financial assistance 2.4% Care of disabled 10.3 %

Upper secondary school 7.5 %

Elderly care 19.6 %

Other education 4.1 %

Diagram 21 • Breakdown of county councils’ costs for activities in 2005, ca SEK 198 billion Public transport & infrastructure 4.6 % Other activities 3.7 %

Education & culture 2.2 % Pol. activities 0.5 % Other health & medical care 8.8 %

Primary care 19.2 %

Dental care 4.1 % Spec. psychiatric care 8.5 % Specialist somatic care 48.5 %

Diagram 22 • Breakdown of municipalities’ costs by cost type in 2005, ca SEK 410 billion External rents 4.0 %

Calculated capital costs 5.8 %

Grants & transfers 6.1 % Other services 6.5 % Personnel costs 57.2 % Purchase of services 12.7 %

External goods 7.6 %

Diagram 23 • Breakdown of county councils’ costs by cost type in 2005, ca SEK 198 billion Grants & transfers 5.5 %

Depreciation etc 3.1 %

External rents 1.4 % Other services 10.3 %

Purchase of services 11 %

Personnel costs 49.9 %

External goods 18.7 %

11

Annex

Diagram 24 • Breakdown of municipalities’ revenue for activities in 2005, ca SEK 417 billion Rents & leases 3.4 %

Other revenue 4.8 %

Sale of services & contracts 1.1 % Fees & charges 6.8 % Specific government grants 3.9 % Tax revenue 68.4 %

Government grants 11.6 %

Diagram 25 • Breakdown of county councils’ revenue for activities in 2005, ca SEK 203 billion Fees & charges 2.9 Specific government grants 2.9 %

Other revenue 5 %

Grant for pharmaceutical benefits 9.7 %

Government grants 7.1 %

Tax revenue 72.4 %

Breakdown of income from fees and charges

Diagram 26 • Breakdown of fee and charge revenue 2005, municipalities, ca SEK 13.7 billion Care of disabled 2.4 %

Other activities 3.3 %

Elderly care 22.4 % Infrastructure & protection 27.2 %

Education 2,9 %

Culture & leisure 8.2 %

Preschool etc 33.6 %

Diagram 27 • Level of charge-financing in municipal tax-financed activities 2005 Total Other services Care of disabled Elderly care Education Preschool etc Culture & leisure Infrastructure & protection 0

12

2

4

6 8 Per cent

10

12

per cent activities in both municipalities and county councils. At first sight this may appear to give a picture of a large measure of financial freedom. However, as taxes are high in most municipalities and county councils, this way of increasing revenues can be limited. In the case of fees and charges, the possibilities of increasing revenue are very limited since the government introduced maximum charges in child care and elderly care.

The remainder of revenue consists of funding from central government in the form of government grants. Most government grant to municipalities is given in the form of unrestricted funds.

A small part of the government grant is targeted on various activities and is linked to some action to be taken by the municipality. A large part of government funding for county councils consists of the grant for pharmaceutical benefits.

14

Traditionally, self-financing by municipalities and county councils has consisted of taxes, on the one hand, and fees and charges, on the other. The latter source has accounted for a small portion of revenue. Fees and charges have had a dual role in local government finances: an income source and an instrument for influencing the consumption of various local government services.

Fees and charges are interesting in two perspectives: First, how much municipalities and county councils raise in fees and charges and for what activities and, second, how large a share of local government costs is covered by fees and charges, both in total and per activity.

In 2005, municipalities collected sek 13.6 billion in fees and charges in tax-financed activities. Since 2001 revenue from fees and charges has decreased by sek 2.2 billion due to the introduction of maximum charges for some services. The decrease was been reduced between 2003 and 2004 on account of a higher ceiling in the maximum charge for child care. The largest individual source of charge revenue is pre-school services and school-age childcare. Other activities with substantial charge revenue are elderly care and infrastructure and protection. In the latter case this involves large fees for municipal parking and some physical planning (diagram 26).

If municipal revenue from fees and charges is related to costs (level of charge-financing) we see that they finance 3.5 per cent, which is a reduction of just less than 1.5 percentage points since 2002. Previously pre-school services and school-age childcare was the activity with the highest level of charge-financing. In 2005 it is infrastructure and protection that has the highest level (see diagram 27).

the Economy Report. November 2006

Annex

For county councils fees and charges account for a smaller share of total revenue. In 2005 county councils collected sek 5.8 billion in fees and charges (diagram 28). The level of county council fees and charges is affected by the level of company-formation in medical and dental care. Fees and charges finance 3 per cent of county council activities, a small decrease on previous years. Dental care is the activity that dominates county council charge-financing, both as a share of the total fees and charges (46 per cent) and in relation to costs (33 per cent). A posible future dental reform will reduce the charge-financing of dental care.

Diagram 28 • Breakdown of fee and charge revenue 2005, county councils, ca SEK 5.8 billion Other activities 7.5 %

Primary care 18.7 % Dental care 45.6 % Specialist somatic care 24.4 %

Breakdown of specific government grants The transition from a number of specific government grants to a general government grant in 1993 excluded a number of grants to municipalities. They were primarily grants regarded as compensation for services carried out for the Government. For the county councils the main part of the former specific government grants consisted of compensation to the organisers of health and medical services that was general in character and not subject to detailed regulation. As a result the transition for the county councils was not as substantial. The government grants to county councils that were abolished include those for special schools for the intellectually disabled and transport services for disabled people.

The refugee grant, labour market grants and compensation for municipal adult education account for 32 per cent of specific grants (diagram 29). The compensation paid by the Government for the loss of charge revenue in child care due to the maximum charge (27 per cent) is also included.

In the case of the county councils government grants to the activity designated as other health and medical care account for by far the largest share (39 per cent). These government grants are for research and development (diagram 30).

There are relatively few specific grants for core municipal activities and they only account for a small share of total revenue.

This share has increased in recent years, partly because of the grant for staff reinforcements in compulsory school and upper secondary school. As of 2005 the specific grants are decreasing in monetary terms, as some of the former specific grants are being transferred to the general government grant. One example is the grant for staff reinforcements in compulsory school and upper secondary school. For county councils the level of specific government grants has been relatively constant over the past three years.

On Swedish municipal and county council finances

Spec. psychiatric care 3.7 %

Diagram 29 • Specific government grants to municipalities 2005, ca SEK 16.4 billion Other activities 17.4 %

Preschool etc 27.4 % Labour market programmes 13.8 %

Com scho

Refugee reception 8.6 %

Upper sec ary school

Individual & family care 2.3 % Care of elderly & disabled 2.9 % Other education 3.2 %

Municipal adult education 9.7 %

Diagram 30 • Specific government grants to county councils 2005, ca SEK 5.9 billion Other activities 17.6 %

Primary care 9.4 % Spec. somatic care 12.5 % Spec. psychiatric care 2.2 %

Education & culture 15.3 %

Dental care 3.9 %

Other health & medical care 39.1 %

13

The Economy Report. On Swedish Municpal and County council finances is a series presented byThe Swedish Association of Local Authorities and Regions and it appears twice a year. In it we deal with the present economic situation and developments in municipalities and county councils. This issue covers the period until 2010.

In 2005 net income for municipalities and county councils was better than for many years – over SEK 13 billion.

In 2006 it is expected to be even better - more than SEK19 billion. But despite relatively favourable demography and expectations of good tax base growth the financial situation looks much worse in just a few years time. This is also true if general government grants are adjusted up-wards in line with tax base growth.

Action to increase efficiency therefore needs to continue if taxpayers are to get as much as possible for every krona they pay. The body best placed to develop these activities is the body that is responsible, has the best knowledge about them and is closest to citizens. Local self-government is good for the economy.

The Economy Report. On Swedish Municpal and County council finances – November 2006 can be downloaded from our website: www.skl.se.

ISBN 978-91-7164-224-0 ISSN 1653-0853

Swedish Association of Local Authorities and Regions SE-118 82 Stockholm Visitors Hornsgatan 20 Phone +46-8-452 70 00 Fax +46-8-452 70 50 info@skl.se, www.skl.se