Arrangement and provision of municipal services

Municipalities’ service arranging responsibility and service provision are two different matters. The first means that, by special legislation, municipalities are required to ensure the availability of and the financing for the services. Municipalities have the financial responsibility for the services even if the service arranging responsibility has been transferred to another municipality or a joint municipal authority. A municipality may, however, itself decide how the services are to be provided.

According to the Finnish Local Government Act, a municipality may:

• provide the services itself
• provide services jointly with other municipalities
• procure services from other municipalities or joint municipal authorities
• establish a limited company, or be a member of one, for provision of services
• procure services from private service providers.

Often it makes organisationally and financially most sense to provide services in co-operation with other local authorities, communities and enterprises.

Joint municipal authorities

The most important form of municipal cooperation is the joint municipal authority. They are set up by two or more local authorities to tend to specific tasks on a permanent basis. Statutory joint municipal authorities comprise hospital districts (20), regional councils (18) and districts for care of the disabled (16). In addition, there are voluntary joint authorities, which perform functions related to for example primary healthcare or vocational education.

Three-quarters of all joint authority expenditure is incurred from organising health services.

Limited companies, co-operative societies and foundations are suited for commercial activities. Private partners can be involved as well, which makes it possible to combine municipal and private capital to implement a wider range of projects. For example, local authorities have established joint waste management companies, enterprise service companies and travel bureaux. 

Local authority corporation

If a local authority is a major shareholder in a company, or exercises dominant control in an entity, the said company or entity, together with the local authority, make up a local authority corporation. The rules of procedure on local authority corporations determine the policies of the participating companies and entitites and their obligation to report to the local authority. For more information on local authority corporations, see Finnish municipalities and regions.

Contractual cooperation

It has become increasingly common for local authorities to agree on the performance of functions without a need to form an organisation. Contractual co-operation is common in the areas of waste management, water supply, rescue services, building inspection, consumer and debt counselling, and education. Some contracts are statutory, such as co-operation agreements on rescue services and contracts for building and maintaining regional emergency dispatch centres and for purchasing health-centre services.

Competitive tendering

A local authority is also allowed to procure services from another local authority or the private sector.  Competitive tendering for purchased services, and quality management require specialised knowledge. Regular feedback from service users and open communication play a significant role in service purchasing.