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Municipalities need minimum 20 billion Ft. in additional funds from gov’t to stay solvent

picture of Hungary town hall

Municipalities are requesting additional financial aid from the government due to significant increases in their expenditures compared to the amount of funding they will receive from the 2022 budget, reports Index.

Most recently, the mayors adopted a resolution to this effect at a board meeting of the National Association of Local Governments (TÖOSZ). Previously, the Association of County-Level Cities had initiated negotiations on receiving compensation for the loss of revenue due to government plans to cut the Local Business Tax in half for 2022.

The National Association of Hungarian Local Governments also urged the government to provide additional subsidies as soon as possible, complaining that the Cabinet had banned municipalities from increasing all local taxes and fees.

Not only has the government prevented municipalities from raising taxes and fees, but Parliament also voted on giving Hungary’s mayors a significant raise, though without providing additional funding for it, leaving it to the municipalities to cover this additional expense.

TÖOSZ President Jenő Schmidt told Index that municipalities would need an additional 7-8 billion Ft. (US $21.5-24.6 million) to cover the cost of municipality-provided free meals. In addition, their estimates show that an extra 4 billion Ft. ($12.3 million) would also be needed to cover wage settlements due to an increase in the minimum wage, as well as an additional 10 billion Ft. ($30.8 million) from the government to cover other municipal-related operating costs.

However, Index appears doubtful how willing the government will be to provide this requested 20-22 billion Ft. ($61.5-67.7 million) in extra funding to municipalities, when it has already largely spent its foreign currency bond issue in the fall and can expect lower revenues next year due to expectations of record inflation and slower economic growth.

[Index]

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