Informed citizen participation in financial planning (summary)

Municipal finance is an important part of the public sector, and financial planning is the core process of municipal operations. Budgeting makes strategy a reality by allocating the resources needed to achieve objectives.

The operating conditions and financial foundations of municipalities are undergoing a significant transformation. As different municipalities are in different situations, challenges must be seen and solutions to these challenges found locally. Citizens can help here, as they can see the outcomes of the inputs and have experience of the combined impacts of the different measures on their daily lives.

Citizen participation in financial planning is allowed by law and even desirable but has not been systematically used. The problem with many participation methods is a lack of background information. This is addressed by the deliberative citizens’ panel, which produces considered, informed public opinion to support preparation and decision-making. It involves a randomly selected group of ordinary citizens familiarising themselves with a topical political issue and preparing a position paper on it.

This is a new innovation in Finland, combining two well-developed public sector functions that are seen as separate: statutory economic planning, honed over decades, and citizen participation in line with the best practices of deliberative democracy. There are isolated examples of such a process from around the world, as well as research literature on the topic.

The Finnish Innovation Fund Sitra funded experiments in Turku, Jyväskylä, Salo, Pieksämäki, Merikarvia and Rautalampi in two phases in 2023–2024. Citizens’ panels assembled by the municipalities addressed the financial challenges identified at different stages of the municipal economic planning process. Based on their briefing, the citizens deliberated on the issues of budget balancing, strategic guidance and evaluation, and investments and the housing supply. Recommendations included advocating long-term fiscal thinking, proposing new solutions and supporting decision-makers in finding acceptable savings targets.

Sitra recommends that municipalities use a randomly selected, deliberative citizens’ panel to support their financial planning, especially on issues which affect a wide range of population groups and strongly divide opinions. The key is to define the task clearly, familiarise the participants with the issue, identify the right time window and link the work to preparation, decision-making and evaluation. Future developments in implementation can reduce costs through the judicious use of outsourcing and the use of AI to support participation, for example.

When seen as a resource for economic planning, informed participation strengthens the decision-making capacity of municipalities, supports their autonomy and implements the principle of administrative proximity.