Budapest ‘demanding its money back’ in talks with Hungarian government, Mayor Karácsony said

At negotiations with the government, Gergely Karácsony, the mayor of Budapest, is demanding that the city “gets its money back”, the metropolitan council said in a statement on Thursday.

Karácsony held talks with Gergely Gulyás, the head of the Prime Minister’s Office, on Thursday, “on the long-term and sustainable regulation of the city’s finances which are in a critical state due to government withdrawals [of the city’s money], ways to finance public transport in a fair way, and solutions beneficial for the entire Hungarian metropolitan system,” the statement said.

Central state budget transferred billions of forints to Budapest

The council said that all court rulings on the matter justified City Hall’s position, including one this week ordering the immediate judicial protection of Budapest and further stating that the State Audit Office‘s analysis of the city’s finances supported Budapest’s interpretation of the situation.

The 10.1 billion forints (EUR 25m) the city has recovered from the central state through the court’s ruling has given some breathing space, but no permanent solution to the “unsustainable financial situation”, the statement said. “Unless the government attitude changes”, another crisis will be brewing in relation to the funding of public services for Budapest citizens, it added.

Talks between the city and the government will continue at a professional level, the municipality said.

Orbán cabinet will help the city

Csaba Latorcai, parliamentary state secretary of the ministry of public administration and regional development, told a press conference after the second round of negotiations between the government and the metropolitan administration that the city’s “bankruptcy situation” was not yet over. “The agony continues,” he said.

He said the government wanted to help the city out, but “disruptions to public transport” were “out of the question”. Further, the government, he added, “does not want to pour money into a bottomless pit.” Latorcai called for a “legal budget”, adding that the mayor had promised one with the backing of the Tisza party. The government official also said an investigation was needed into how the capital went bankrupt.

Solidarity tax blamed

He said the previous Budapest administration had left the city with reserves of 200 billion forints, while tax revenue of several hundred billion forints had accrued in the meantime. Yet Karácsony blamed the post-Covid solidarity tax for the city’s financial ills, even though “the bankruptcy situation” emerged only a few months ago.

Latorcai said his ministry has asked an economist to head a professional working group look into the capital’s finances and investigate how the money of Budapest taxpayers is being spent.

The Hungarian State Treasury, he noted, swiftly returned the 10 billion forints plus interest in compliance with the court ruling in connection with the solidarity tax, and now the government expected equally legally compliant action from Karácsony, he added.

The government, at the same time, is appealing the court ruling as the mayor “misled the court” by claiming that the capital collected 25-30 billion forints in business tax in the first half of the year, when in fact it was more than 135 billion. “So the court’s ruling was based on incorrect information”, he said.