Most municipalities expect budget deficit: ‘Situation untenable’

Eight out of ten municipalities expect a budget deficit for 2021, which says auditing and consultancy firm BDO based on an analysis of the annual accounts of all 355 municipalities for 2019, and the budgets for 2021.

โ€œ Last year we already warned about it,โ€ says Rob Bouman chairman of the government industry group of BDO. โ€œThis is a financial peat fire. The situation is untenable.โ€

The total deficit in municipalities is projected at โ‚ฌ1.3 billion. There are major differences between regions. Municipalities in Flevoland are relatively well. Municipalities in Zeeland have the most difficult.

Youth care and daytime activities

The main cause of this decline is the increasing expenditure in the social domain, such as benefits, youth care and daily spending, says BDO. Almost 40 percent of municipal spending goes there.

According to Bouman, the concrete consequences of these deficits are that services in the social domain are shrink. โ€œDemente elderly people can, for example, rely on the Social Support Act, for day spending. When finances are tight, a congregation can say: dont go there for three days, but, for example, only one day.โ€

Corona

In 2018, the majority of municipalities were already struggling with deficits, around 58 percent. That increased to 65 percent in 2019. The annual accounts of 2020, the corona year, are not yet finished and are therefore not included in this study. According to BDO, the coronacrisis is on top of already gloomy prospects.

Corona leads to higher expenditure, such as enforcement, and lower revenues. There are fewer visitors in municipalities, which means that tourist and parking taxes are partially eliminated. Municipalities are also responsible for implementing the aid scheme for self-employed workers, the TOZO.

Municipalities also receive support from the Kingdom, but according to BDO, it is questionable whether this aid will reimburse everything. The office also points to hidden costs for municipalities, such as additional losses for cultural institutions and increased pressure on the social domain if the crisis lasts longer.