INVESTMENT POTENTIAL of GDAŃSK in the New Economic Reality
Total Page：16
File Type：pdf, Size：1020Kb
INVESTMENT POTENTIAL OF GDAŃSK in the new economic reality publisher partner GDAŃSK Voivodeship Pomerania Mayor Aleksandra Dulkiewicz Area 2 262 km Population density 17872 os./km Population 468 158 CONTACT DETAILS Gdańska Agencja Rozwoju Gospodarczego Sp. z o.o. Żaglowa 11 80-560 Gdańsk +48 58 722 03 00 [email protected] LESS REVENUE, MORE CHALLENGES Currently the greatest financial challenge for Gdańsk is to maintain the provision of education and fight the consequen- ces of the pandemic. We also need to help our entrepreneurs. This is an unusual year - says Aleksandra Dulkiewicz, Mayor of Gdańsk. How well is Gdańsk doing at present? The answer to this question is not a simple one. On the one hand, the Fitch rating agency gave us an “A-“, which is a high rating. On the other hand, Aleksandra like any other local government, we have a problem with current expenses, Dulkiewicz, mainly in the area of education. On top of this, we are also facing difficul- Mayor of Gdańsk ties caused by the Covid-19 pandemic. This forces us to make changes in the budget. So far we have cut our expenses by PLN 295 million. On the other hand, our revenues have fallen by 250 million compared to the budget adopted in December 2019 year, due to smaller revenues from personal (PiT) and corporate (CiT) income taxes or public transport tickets. Let me add that the revenues were initially estimated at PLN 3.8 billion, while the expenses would amount to PLN 4.28 billion. Are you only reducing your current expenses or also your investment expenses? The reduction in current expenses amounts to approx. PLN 110 million. As for investments, we have decided not to cut them, but to postpone them. Then, there are investment projects, which have already been launched, but which - for various reasons - need to be extended over time, therefore their settlement will also be delayed. An example of such a large invest- ment is the construction of the Biskupia Górka flyover in the city centre. It is quite a complicated project that runs over a railway. Revenues from the PiT 4 tax have always been an essential source of in- come for the local government’s budget. How much was it affected by the changes in the regulations? The changes in PiT 4 became effective last year. For this reason, already at the stage of budget approval for 2020, we took into account that the revenues would be PLN 100 million lower. So we were already facing dif- ficulties at the beginning. Later, this situation, which not only Gdańsk, but the whole world is trying to deal with, caused a further reduction in the revenues from PiT by another 50 million PLN.. This makes PLN 150 million in total. In 2017, Gdańsk still had a budget surplus, but in recent years it changed into a deficit. Are the changes in PiT the main reason for this? Not only that. The years when we had a surplus was the time of signifi- cant EU investments, and our budget was boosted with large subsidies. The main reason for the deficit is education. This is a difficult topic and it seems to me that it is sometimes hard for local government officials to explain the mechanisms of financing education to the public. The difficult financial situation of local governments is aggravated by the problems in the sector of education. Serious problems. Each year, the gap between the government subsidies and the real costs we incur on education widens. In September this year, another pay rise for teachers was accepted. Though it is justified, Gdańsk received an additional PLN 13 million subsidy for this purpose, while the real cost of this pay rise is estimated at almost PLN 50 million. This means that we have to cover PLN 37 million from our own budget. I want to stress that cutting our expenses in the budget for this year by PLN 300 million did not affect the sector of education. We are not cutting any expenses in this area. Far from it, we have to pour even more funds into education at this difficult time. What is then a greater challenge in this unusual year - counteracting the consequences of Covid-19, or the implementation of tasks imposed on local governments with reduced funding? this makes it sound like there are no hospitals in Gdansk, which isn’t true. So what exactly do you mean? As they generate considerable expenses. We support hospitals run by the marshal of the province in various ways, but this is not our biggest financial concern. What is our main concern at present is, as I mentioned, education, followed by the measures against the consequences of the pandemic. There are other problems as well, such as reduced revenues from public transport. For many years we were able to keep a balance in terms of expenses on public transport, with 50% covered by revenues from tickets and 50% from the city budget. However, for three years this balance has been disturbed. In the budget for 2020, ticket revenues were estimated to account for only 37%. Now the pandemic has taken its toll, too. We estimated revenues from tickets at PLN 125 million, but we already know that the number will be lower by at least PLN 40 million. Which means we will have to add even more money. In addition, we need to have an entire fleet running, because since we are in the red zone, only 30% of places in vehicles can be occupied. So the gap is continuously widening. 5 In this case, perhaps it is necessary to increase ticket prices? For many years, we have been consistent in maintaining an attractive pricing policy for those who regularly use public transport. What I mean is various season tickets. This year, in cooperation with the marshal of the province, who supervises railway transport (SKM - Fast City Rail and PKM - Pomeranian Metropolitan Railway), we introduced a special offer. Now we have a joint ticket for trams, buses, SKM and PKM within the city of Gdańsk. A monthly ticket costs PLN 99. We want to keep encouraging people to use public transport despite the pandemic.. Tourism is a very important sector of the economy of Gdańsk. How was this season? First of all, would like to point out observe that it is not the city that directly derives revenues from tourism, but its inhabitants and businesses. This is important. The season was relatively good, taking into account the pandemic, but the number of foreign tourists declined by approx. 78%. These are shocking figures. On the other hand, we had an increase in the number of domestic tourists by 28%. Nonetheless, it is a vast difference. In absolute terms, it looks much better. In the summer of 2019, Gdańsk was visited by 1.09 million tourists, while this year by 0.96 million. The decline does not seem so sharp. While the statistics may look relatively good, you also need to take into account where these tourists were staying. Last year, about 60% of them stayed in hotels. This year - only 31%. The number of tourists who declared that they were staying with family, friends or were using a rented apartment significantly increased by almost 15% compared to the previous year. This type of tourism is evidently different. And the reason is a reduced number of visitors from abroad.. Probably the restrictions related to social distancing and isolation also played a role. That is true, although it is a little strange, as hotels, which have to meet strict sanitary requirements, seem to provide greater safety. Probably financial aspects were also involved. The summer allowed us to recover a little, but it lasted two months, while Covid-19 has been around for six months already. What measures have you adopted to support entrepreneurs? Handling the anti-crisis shield was a great challenge, since - as should be remembered - it was mainly the task of labour offices. This support had to be organized in a short time and we delegated a lot of people for that purpose. Rental fees for catering establishments located in munici- pal premises were automatically reduced to PLN 1. This city revenues by PLN 1.4 million. There is also a possibility of such a rental fee reduction for premises used in other industries. However, in this case we ask the entrepreneur to prove a decrease in revenues, as this support is after all provided by all taxpayers in Gdańsk. 6 Investment potential of gdańsk In the autumn, the situation has gone bad again. Are you planning any support measures? We will prepare a support program, although this situation is constantly changing and taking us as well as entrepreneurs by surprise. We also have other forms of aid. Gdańsk Entrepreneurship Foundation is running the project „Get hold of the crisis”. Anti-COVID laws are problematic. Many people have no experience or simply cannot afford legal aid. In this way, we can provide support and mentoring for micro-entrepreneurs. We have been talking so far about the condition of the city. And what about the condition of entrepreneurs from Gdańsk? I believe it is good. It just depends on what data we use to assess it. As a city, we were active in the crisis management team appointed by employ- ers’ organizations, for which we received awards and gratitude. According to the data provided by the Gdańsk Labour Office, the level of unemployment increased only slightly. There are very few reports of collective redundan- cies, and those that we received were not large in scale.