Tallinn's 2026 budget will be approximately 1 percent higher than last year's, totalling €1.32 billion.

Spending will increase faster than income, as expenditures are set to rise by 6.3 percent while revenues will grow by 3.7 percent.

The majority of Tallinn's revenue comes from national taxes (69.7 percent). Personal income tax is projected to bring in €781.2 million, a 4.7 percent increase.

However, Tallinn's own sources of revenues remain relatively small. Income from goods and services is projected at €112.4 million, and revenue from asset sales at €21.3 million. Dividend income from AS Tallinna Vesi, in which the city holds a 55.1 percent stake, is expected to reach €4 million.

Education is the largest share of operating expenses (42 percent), and together with mobility, social welfare, and health care, accounts for three-quarters of all operating costs.

Investment spending decreases

The city plans to spend €195.6 million on investments, mostly for education (45.7 percent), followed by mobility (roads and transport, 15.2 percent), and social welfare and health care (9.2 percent).

Officials have said the budget is 20 percent smaller than last year.

Tallinn plans to borrow up to €100 million. By the end of 2026, the city's net debt burden is expected to reach 38 percent.

Several new schools are in the planning phases and extensions or modernization work is planned at others in the capital. Two new kindergartens will be completed and work is underway on several more.

Starting in September, kindergarten fees will be abolished for Tallinn residents of Tallinn, costing the city over €2 million this year and an estimated €7 million annually.

Back-to-school support payments will be increased, totaling €8.6 million. With school lunch prices set to rise in the next academic year, the city will allocate €6.3 million to cover the cost increase.

Culture, heritage, sports, and green infrastructure

Among the nearly €8 million in cultural investments, the largest item is the design work and start of renovation for the Tammsaare Museum.

Heritage investments include continued work on stabilizing the Toompea retaining wall, renovations to the city wall and bastions, and conservation of the Pirita monastery ruins.

The city's largest sports project is the full renovation of Kadriorg Stadium, which turns 100 this year. This includes upgrades to the main arena and stands, the football pitch, as well as roads and other infrastructure. The work will cost €10 million.

Design work will resume on the Lasnamäe Olympic Swimming Center. A new football hall will be built on Punane tänav in Lasnamäe, and a Pumptrack track will be constructed in the city center.

In the social sector, a new shelter and day center for the homeless will open on Punane tänav early this year. By the end of the year, a new building for Tallinn's special care and rehabilitation services center for clients with severe or profound intellectual and multiple disabilities will be completed on Võidujooksu tänav.

A new circular economy center will be built in Lasnamäe, featuring a waste station, repair workshops, reuse spaces, a circular shop, classrooms, and a café.

The city also plans to step up efforts to combat invasive species, allocating more resources to fight the Spanish slug and Sosnowsky's hogweed.

In terms of urban landscape, the second phase of Pae Park's construction will be completed. At Pirita Beach, design work will begin on the first phase of a new recreational area, including a promenade and sports fields. Construction of the Kass August promenade – named after a local cat called August – on Kopli is also expected to be completed.

Mobility: More frequent transit service and the return of trolleys

Tallinn will continue to offer free public transport, which has cost the city approximately €120 million annually. Free train travel within city limits will also remain available to residents.

This year marks the third phase of changes to the public transport network and the city plans to increase transit capacity and tighten up schedules.

Trolleybuses will return to the capital's streets, with 40 battery-powered trolleybuses expected to arrive in the capital and enter service in the second half of the summer.

Street reconstruction will continue with the first phase of Peterburi tee, along with Lauteri, Mustjõe, and Värvi streets.

Design will begin for the reconstruction of Petrooleumi, Väike-Ameerika, and Luha streets, as well as Tina and Vase streets.

Bike lane construction will begin on Tehnika tänav, and work on the Endla tänav tunnel in the same area will continue.

Design work will also start on reconstructing the noise barrier along Tammsaare Road.

City labor costs rise

The city government has pledged to raise salaries for employees within the city system. To support this, personnel costs at city institutions will be increased by an average of 10 percent starting May 1.

Minimum salaries for cultural and youth workers with higher education will also be raised.

The number of positions in city agencies will increase: as of January 1, 2025, there were 1,620.9 full-time equivalent positions; by March 1, 2026, this is expected to rise to 1,635.8.

"Compared to January 1, 2025, the staffing level will increase by 14.9 positions by March 1, 2026. Most of the new positions are linked to city district governments," the budget explanatory memorandum states.

This year, the city has allocated €16.1 million for loan and bond principal repayments and €11 million for interest payments.

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