RIGA, Sept 30 (LETA) - If the municipality of Valka Region is unable to cope with the budget situation for a longer period of time, it may consider the possibility of annexing the municipality to a neighboring municipality, Minister of Smart Administration and Regional Development Raimonds Cudars (New Unity) told LETA in an interview.

The ministry is aware of the problems in the Valka municipality. They are related to the heating supply situation and the fact that the municipality has undertaken significant financial obligations towards a private heat producer, which has caused significant cash flow problems.

The Minister said that there were two solutions to this situation - the municipality could solve it itself or the state would have to step in. "I look forward to the municipality's involvement in solving these temporary financial problems in order to continue to fulfill its functions," Cudars said.

If that fails, financial stabilization tools can be triggered, though there are other ways to influence the situation.

"If Valka cannot cope with the budget in the long term, then there is a question of Valka being annexed to one or other larger municipality in the immediate vicinity," the minister said, adding that Valka is one of the smallest municipalities and already during the administrative-territorial reform in 2021 there was a question about the economic feasibility of a separate Valka municipality, taking into account the size of the territory and the number of residents.

Cudars noted that there is currently a personal income tax surplus. For municipalities, personal income tax is the main tax that makes up their budgets, so there is stable growth and a secure level of funding.

He believes that it is very important that each local government is aware that if their actions have resulted in a hole in the municipal budget, it is not the responsibility of the state, it is the responsibility of the local government for how they have used the money they have.