Covering of deficits

If a county’s financial statements show a deficit, section 115 of the Act on Wellbeing Services Counties provides that this deficit must be covered within no more than two years from the start of the year following the adoption of the financial statements, in other words, within three years of the balance sheet date.

If the county accumulates more deficit, the deadline for covering the new deficit will be the same as for the first accumulated deficit. For example, if a county first accumulated deficit in 2023, this deficit must be covered by the end of 2026. If more deficit was accumulated in 2024, this must also be covered by the end of 2026.

Temporary opportunity to extend the deadline for covering the deficit

Most of the counties have accumulated significant deficits in the first years of their operations, and these deficits cannot be covered by the deadline described above.  As of June 2026, a temporary section 115 a was added to the Act on Wellbeing Services Counties, which allows the deadline for covering deficits to be extended if certain conditions are met.

The deadline for covering deficits may be extended to the end of 2027, 2028 or 2029 if:
1) the extension of the deadline is necessary to comply with legislation;
2) the accrued deficit can be covered by the extended deadline; and
3) the county has a plan approved by its county council to cover the accrued debt without delay.

Counties apply to Ministry of Finance for extension of deadline

A county can submit an application for an extension once the county executive has prepared the financial statements. The application must be submitted by the end of August in the year of the deadline for covering the deficit. The wording of the temporary provision also allows the application to be resubmitted by the end of August of the extended deadline in 2027 or 2028.

The county must include a feasible plan approved by its county council detailing the measures it will take to cover the deficit. The plan must describe the financial impact of those measures, and the new deadline applied for and the plan much match. 

Regardless of the opportunity to extend the deadline for covering the deficit, the main rule remains that counties must cover accrued deficits by the deadline laid down in section 115, subsection 2 of the Act on Wellbeing Services Counties. The length of the extension of the deadline depends on how quickly the deficit could objectively be covered based on the county’s financial position and the plan approved by the county council. Even if the plan to cover the deficit were to be prepared with a 2028 deadline in mind, the Ministry of Finance could decide to only extend the deadline to the end of 2027. The decision is based on an overall review of the individual county’s financial position and outlook. Among other things, this review can account for the cost trend and financial development of the county and for the ratio of the county’s accrued deficit to its cost trend and financial outlook.

When deciding whether to extend the deadline for covering deficits, the Ministry of Finance may use sufficiently up-to-date and detailed information obtained in pending or previous steering procedures. Such procedures include negotiations with the county, procedures to alter the county’s budget authority for borrowing and additional financing procedures. If necessary, the Ministry of Finance may also start a proactive financial steering procedure to gather a sufficient base of information.

The deadline for covering deficits cannot be extended unless the deficit can objectively be covered by the new deadline. If covering the deficit would require, for example, a significant decrease of net costs over several years, the county's financial position may require extending measures over a period that is one or two years longer. In such cases, other procedures available under the legislation in force, such as the assessment procedure, will be considered.

A county may be subject to an assessment procedure if the deficit has not been covered by the deadline laid down in law. If the Ministry of Finance has extended the deadline for covering the deficit, an assessment procedure can only be started on the grounds that the deficit has not been covered once the extended deadline has passed.