Budapest to pay the price: How Hungary’s 2026 budget plans could further drain local governments

Hungary’s local governments, with Budapest at the centre of the storm, are bracing for another year of heavy financial pressure as the government significantly increases the so-called “solidarity contribution” in 2026. While the levy is officially intended to support poorer municipalities, critics argue that it has increasingly become a tool for central budget balancing: one that disproportionately affects the capital and opposition-led districts.

Nearly HUF 100 billion taken from Budapest alone

According to a government decree published just before Christmas, Budapest will be required to pay HUF 97.74 billion (EUR 250 million) in solidarity contributions in 2026: by far the largest amount in the country. This marks yet another sharp increase after years of steady escalation: the capital paid HUF 58 billion in 2023, HUF 75 billion in 2024, and HUF 89.1 billion in 2025, Telex reports.

While the contribution is calculated based on a municipality’s tax capacity and population, analysts have long warned that the system produces serious distortions. A previous economic analysis found that Budapest lost 12.9% of its total revenue to the levy in one year, compared to the more typical 5–6% seen elsewhere. This is particularly significant given that the capital is legally obliged to finance public transport, which alone costs around HUF 150 billion (EUR 390 million) annually.

Despite repeated government claims that the money is redistributed to poorer areas, there is no publicly available breakdown showing where the funds actually end up.

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Districts and cities hit unevenly

The impact is not limited to City Hall. Among Budapest’s districts, Óbuda-Békásmegyer (District III) faces the highest absolute burden, with HUF 5.98 billion (EUR 15.6 million) to be paid in 2026. By contrast, the government-led District V (Belváros) will contribute just HUF 1.16 billion.

On a per-capita basis, residents of Csepel (District XXI) are hit the hardest, paying over HUF 120,000 (EUR 312) per person, while Angyalföld (District XIII) faces a lower (though still substantial) figure of around HUF 101,000 (EUR 262) per resident.

Outside Budapest, Győr and Debrecen top the list after the capital, largely due to strong industrial tax revenues linked to multinational companies such as Audi. Even small towns with exceptional business income, including villages near oil fields or chemical plants, face extreme per-capita deductions running into hundreds of thousands of forints per resident.

“Solidarity” or central budget patch?

Several mayors (including those from the governing Fidesz party) have openly questioned the fairness and transparency of the system. Székesfehérvár’s mayor, András Cser-Palkovics, has argued that while solidarity between municipalities is justified, the current model is excessive and poorly designed, suggesting a more moderate, regional redistribution instead.

Opposition-led districts have been even more outspoken. Budapest District II mayor Gergely Őrsi said the solidarity contribution in his area has increased fifteenfold since 2019, exceeding HUF 4 billion (EUR 10.4 million) next year, 444.hu writes. He argues that residents’ local tax payments no longer benefit their own communities, but instead “plug holes in the central budget”.

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A public clash exposes the numbers

The issue recently escalated into a public dispute between Őrsi and National Economy Minister Márton Nagy, who accused the mayor of political scaremongering. Nagy pointed out that District II’s local business tax revenues have grown from roughly HUF 7 billion (EUR 18.2 million) in 2019 to over HUF 12.5 billion (EUR 32.5 million) in 2025.

However, when adjusted for inflation, independent calculations show that real revenues have barely changed over six years, while the solidarity contribution has surged dramatically. In 2019, the levy absorbed less than 4% of local business tax income; by 2025, it had risen to nearly 30%. Even using the government’s own figures, the gap between revenue growth and withdrawals has become increasingly difficult to justify.

Local governments push back

Against this backdrop, the Hungarian Association of Local Governments (MÖSZ) has submitted an eight-point reform proposal ahead of upcoming consultations with the government. The document calls for constitutional guarantees for local self-governance, financial autonomy for municipalities, and a complete overhaul of what it describes as a “discriminatory” solidarity contribution.

The association also stresses that Budapest’s situation is symbolic, warning that pitting the capital against the countryside undermines democratic equality. It argues that local governments should not become collateral damage in national political conflicts and urges the next government to revisit the 2026 budget framework immediately after the elections.

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Government promises talks, but after the election

Public Administration Minister Tibor Navracsics has confirmed that consultations on reforming the local council system will begin in January. However, he made it clear that any comprehensive changes would only be finalised after the elections, leaving the 2026 solidarity contributions firmly in place for now.