Reykjavík City's 2026 budget reflects coalition's social priorities
The Reykjavík City Council approved the city's budget tonight. The budget targets an operating surplus of more than 3.4 billion króna in Section A – Core Operations, which covers Cty operations funded by tax revenue. Mayor Heiða Björg Hilmisdóttir presented the budget proposal for the first time.
The budget for 2026 and the five-year period through 2030, approved by the City Council tonight, projects that all financial policy goals will be met.
Protecting essential services
"The coalition parties' first budget as the City Council majority demonstrates responsible operations that protect essential services in line with the coalition parties' social priorities," says Mayor Heiða Björg Hilmisdóttir.
"We will continue developing services for children, young people and their families, and we are accelerating and streamlining housing development. The numbers in this budget represent residents who depend on the City's wide-ranging services. In 2026, we will continue working to free up resources for improving services to our most vulnerable groups. The guiding principle for this work comes from compelling proposals received during the consultation process from residents and City employees. We are also introducing new measures to reduce employee illness."
Updated plan shows strong operations
The combined impact of Reykjavík Energy's revised financial forecast and Statistics Iceland's new economic forecast on Section A – Core Operations results is estimated at a negative 1.332 billion króna, reducing operating results from 4.763 billion króna to 3.431 billion króna.
The dividend payment plan for Section A – Core Operations was revised between discussions to match Reykjavík Energy's financial forecast. The resulting impact is a reduction of 1.871 billion króna.
The revised budget assumptions align with Statistics Iceland's new economic forecast published Nov. 14. The updated economic forecast now projects lower economic growth, higher inflation and weaker job market prospects. The forecast considers weaker export prospects following various operational setbacks in recent months.
The updated forecast projects 5.2% wage growth in 2026, about 0.7 percentage points higher than in the economic forecast that the Reykjavík City budget draft was based on.