Next year’s budget contains severe cuts to local governments’ funding, Budapest Mayor Gergely Karácsony told a press conference on Tuesday.
The government has already withdrawn funding from municipalities citing the protection efforts against the novel coronavirus epidemic, while local governments had to cope with an increased task load during the crisis, he noted.
The government now wants to maintain the austerity measures until 2024, the next local elections,
he said, adding that if they stay in place, “it is only a matter of time until the Budapest municipality will go bankrupt”.
Karácsony said he would propose at talks between the interior ministry and alliances of local governments on Wednesday that the government do not strip local governments of their share of vehicle taxes, an important source of revenue. He proposed to flag those monies for road repairs instead.
Karácsony said he would also propose that the government compensate cities for loss of income on public transport ticket sales.
Budapest’s transport company is anticipating a loss of income in the range of 20-30 billion forints (EUR 60-90m) due to the epidemic. Meanwhile, the government is planning to raise the “tax on local governments which they call a solidarity tax” four-fold, he said.
Regarding the European Union’s funding to handle the health-care and social crisis in the wake of the epidemic, Karacsony said it would be “extremely unfair”, and in breach of EU law, if the government “kept that one billion euros to itself”.