The care reform at the center of the dispute took effect in July 2023. When the reform was introduced, the Tartu city government expressed concern about its funding, as municipalities became responsible for covering part of the cost of long-term care services without receiving additional funding from the state. As a result, Tartu's spending on general care services increased significantly compared with the period before the reform, Tartu City Secretary Jüri Mölder said.

"We have clearly demonstrated that our spending on general care services has increased and we have also pointed to spending cuts in the social services sector. If that still is not enough to prove our case, then I have to ask: What would be?" Mölder said.

Two years ago, Tartu also took the issue of inadequate funding for the care reform to the Supreme Court. The court ruled that municipalities are responsible for organizing and funding general care services. However, it also found that municipalities may seek additional funding through the courts if they lack sufficient resources to fulfill those responsibilities. As a result, Tartu filed a lawsuit against the state with the Tallinn Administrative Court last year, seeking approximately €1.6 million in additional reimbursement for the cost of providing general care services in 2024.

"The Supreme Court has said that if a municipality demonstrates that its financial resources are insufficient, then the court hearing that municipality's claim should declare unconstitutional the legislative act that failed to provide adequate funding. In the Tallinn Administrative Court, the dispute also centered on whether the general care services funded by the City of Tartu went beyond what was required or whether they simply met the minimum standards established by law," Mölder said.

Last year, Tartu also submitted a claim for reimbursement of the additional costs to the Ministry of Social Affairs, but the ministry concluded that the request was unfounded and rejected it. In June of this year, the Tallinn Administrative Court also dismissed the city's lawsuit. Tartu subsequently appealed the ruling to the Tallinn Circuit Court.

"This time, the dispute is about whether the additional tax revenue Tartu received in 2024 as a result of amendments to the Income Tax Act was sufficient to cover the broad funding obligation imposed on municipalities by the care reform. We continue to maintain that there was a shortfall of just over €1.6 million in 2024. Even though the Tallinn Administrative Court did not accept our arguments, we believe it is right to continue the case because this is a matter of principle," Mölder emphasized.

The city secretary added that once the dispute over 2024 costs has been resolved, the city will pursue similar claims for 2025 and 2026. For 2025, for example, Tartu plans to seek roughly €3 million from the state.

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