Pärnu, better-known for summer vacations than bad debt, is in the toughest financial situation of any Estonian municipality.

PÄRNU, Estonia — Estonia’s “summer capital” is being forced to cut the wages of all municipal employees to avoid asking the national government for a financial bailout.

Pärnu, a coastal city in southwest Estonia with 45,000 residents, faces a major cash shortfall. Reduced income tax revenue and debt taken on by the former municipal government has left the municipal finances insolvent. Pärnu’s debt today is 44.5 million krooni (€2.8 million) of which 17 million krooni (€1 million) is formed by unpaid bills. To avoid asking 20-30 million krooni (€1.2-1.9 million) from the national government and thus handing over control of the municipal budget to the Vabariigi Valitsus, Pärnu is cutting the salaries of all city hall officials by 20 percent and employees by 10 percent.

Pärnu Deputy Mayor Annely Akkerman told ERR that no employee will be able to avoid the wage cut.

Mayor Toomas Kivimägi said most of next year’s Christmas bonuses will be canceled, too.

“Our goal is that the wages would be at least 90 percent of the actual income, not 50 percent salary and another 50 percent bonuses,” Kivimägi told Delfi.

Mart Viisitamm, the previous mayor under whose term most of the debt was taken on criticized the wage cuts.

“It’s time for Toomas Kivimägi to finally start working and stop whining, and if he cannot do that then he should quit,” Viisitamm told Delfi.

Viisitamm said the city should find other ways to save money instead of wage cuts, especially for lower-wage employees such as municipal social workers, whose average wages today is 5,200 krooni (€330) a month.

Pärnu is not the only city in Estonia having financial troubles, but faces the deepest deficit by far.