Two out of three municipalities in Flanders believe they need to intervene to maintain fiscal balance by 2025. The reason for this is high inflation, according to a survey by the Flemish Cities and Municipalities Association (VVSG). This mainly pertains to interventions in its operations, such as not replacing employees.
VVSG stresses that the pressure on the local treasury is high. For example, there are four adjustments to the index for employee wages, grants to police and emergency areas are increasing, and investments are becoming more expensive due to higher material prices and energy prices continuing to rise.
The various boards indicate that they will have to intervene in the area of personnel spending. They can do this, for example, by not replacing employees or postponing (unnecessary) appointments.
Increasing local taxes is not on the agenda at the moment. “Municipalities take responsibility and think first of all about what they can do themselves, rather than opting for a tax increase that affects the population,” explains Wim Dries, President of VVSG.
The VVSG is asking the Flemish government and the federal government to come up with durable solutions so that services and investments can continue. The federal level can do this by giving local authorities maximum certainty about the municipal revenues and expenditures they have an impact, it seems.
In addition, the federal government must ensure structural co-financing of pension expenditures for statutory officials in local authorities. It must bear, among other things, the financing of the new police sectoral agreement. In addition, the federal government must continue to bear 50 percent of the costs of the fire service.
The VVSG requires the Flemish government to make the municipal fund inflation-proof. This can be done by raising the growth rate by 3.5 percent annually if inflation is higher.
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