More than 80 percent of Dutch municipalities expect to have a budget deficit in 2026 and 2027. That reports the Association of Dutch Municipalities (VNG) Friday. The projected deficits are a direct consequence of government cuts to the municipal fund, which accounts for 70 percent of municipalities' income.
In recent years, municipalities have gone to great lengths to submit balanced multi-year budgets – this is mandatory. However, the VNG has asked municipalities not to comply with this obligation so that it becomes clear what exactly the extent of the financial problems of municipalities is. The VNG wrote in a letter to all 342 municipalities that this was “exceptional advice”. But, the association wrote: “It is an exceptional situation in which municipalities find themselves.”
Since 2015, the government has transferred all kinds of complex and expensive tasks to municipalities under the guise of decentralization. Subsequently, cuts were made to these government tasks, causing virtually all municipalities to become financially stuck.
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In practice, the money shortage means that the government has become much less good at tackling complex problems, such as youth care, but also that public facilities such as libraries, swimming pools, playgrounds and theaters have to be cut back. Furthermore, municipalities are reluctant to make large investmentsas they cannot properly estimate whether they will have the necessary financial coverage in the coming years.
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