BREAKING – Mayor Karácsony: the State Treasury withdrew billions from Budapest, paying wages is problematic for bus, metro, tram drivers

Mayor Karácsony government withdrew money (Copy)
Photo: FB/Karácsony

The Hungarian State Treasury has “unlawfully” withdrawn more than 10 billion forints (EUR 24.8m) from Budapest’s accounts, and the municipality has halted payments to some municipality-owned companies to preserve liquidity, Gergely Karácsony, the city’s mayor, told a press conference on Thursday.

The companies involved are public utility company Budapest Közművek, transport company BKK and road and street lighting company Budapest Dísz- és Közvilágítási Ltd, Karácsony said.

Karácsony noted that the municipality on Tuesday submitted a request for immediate judicial protection over a dispute concerning the solidarity contribution City Hall is required to pay into the central budget.

Mayor Karácsony government withdrew money
Photo: FB/Karácsony

Immediate judicial protection should protect city funds until the court has made its decision, so the Treasury’s step “is unlawful as well as immoral because it is putting the capital’s operations at risk,” Karácsony said.

The municipality’s “most important aim in the coming months and weeks” will be to pay the net wages of 27,000 employees of city institutions, he said.

Government reacts

Botond Sára, the central government’s Budapest official, said the capital’s budget was “illegal and unsustainable” the moment the left-wing majority of the city assembly approved it. In a post on social media, he also said the Budapest administration’s decision to take responsibility for the Rákosrendező area of the city was “so big” that it could “imperil the city’s financial situation and operations”.

Further, he said the state treasury’s debt collection order had been legal as the courts had not ruled otherwise. He said Karácsony had turned to court but doing so in itself did not have the effect of suspending the payment into the treasury. “Anyone can have an opinion on the legality of something but the court decides in the end; it has indeed ruled several times but not in favour of the metropolitan council. The Kúria’s latest ruling is also clear: the capital’s budget is illegal,” he added.

Vitézy talks about unprecedented crisis

Dávid Vitézy, the leader of the Podmaniczky Movement, said in a post on Facebook that Budapest had entered “an unprecedented crisis”, adding that “in the current financial situation we should come together, negotiate, and look for solutions”.

He said “excessive government deductions” were behind the budget crisis. At the same time, the Kuria, Hungary’s supreme court, has ruled that the main figures of the budget must be revised and the mayor failed to nominate a deputy, “which is why the City Hall is operating unlawfully”. After scandals around public transport company BKV, the company’s chief executive resigned, he noted, “and today the chief executive of [Budapest transport authority] BKK has also quit”, he added.

Vitézy noted the lack of boards of directors and supervisory boards in disarray, adding that the city assembly had rejected company reports submitted by various companies operating under the metropolitan council. “A complete crisis at an operational and financial level has taken hold in the capital and a crisis of trust between the mayor and the city assembly,” he added.

Budapest must pay its taxes, says minister

Márton Nagy, the national economy minister, responding to the mayor’s statement, said no one was above the law and everyone must pay the solidarity tax, adding that the state treasury had rightfully collected the tax. In a post on social media, Nagy said the legal protection could not prevent the collection, which was “a method of tax collection” rather than an administrative procedure. The solidarity tax, he added, was budget revenue and the treasury was obliged to take all possible measures to collect it.

“Tisza-Karácsony bankruptcy coalition” manage to make Hungary’s richest city insolvent, says Fidesz

The “Tisza-Karácsony bankruptcy coalition” needed less than a year to bring Hungary’s richest city to insolvency, Alexandra Szentkiralyi, the Fidesz-Christian Democrat group leader in the city assembly said in a video post on Facebook on Thursday, referring to the opposition Tisza Party and the city’s mayor, Gergely Karácsony.

She said there were more and more bankruptcy briefings and the heads of Budapest’s key companies were quitting. “But all the mayor can do, instead of taking responsibility and seeking a solution, is point fingers,” she said.

Szentkirályi said Karácsony, Tisza and Dávid Vitézy, leader of the Podmaninszky Movement, “voted for an illegal 50 billion forint [EUR 123.8m] hole” in the city’s budget. And referring to the Rákosrendező area of the city which requires a clean-up before investments there can go ahead, she said they “splashed 50 billion on landfill” at the site.

She said Budapest had reserves of 214 billion forints when Karácsony was handed over the keys to City Hall, while “its industrial revenues doubled”, “yet they have bankrupted the capital”. Budapest residents, she added, wanted answers and for stable operations resume.

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