Two out of three Flemish communes feel they will need to take action to balance their budgets by 2025 due to high inflation, according to a survey by the Association of Flemish Cities and Communes (VVSG, Dutch acronym).
VVSG stresses that the pressure on local budgets is high, with four salary indexes, increased expenditure on police and relief services, costlier investments due to higher raw material prices, and skyrocketing energy costs.
Many local administrations say they will focus in the first place on cost-cutting measures such as not replacing staff who leave the service or putting off non-essential hirings.
For now, an increase in local taxes is not on the cards. “The communes are taking up their responsibilities and looking first and foremost at what they can do themselves, rather than an increase in taxes that hits residents,” VVSG President Wim Dries explained.
His association is asking the Flemish and federal authorities to find lasting solutions so that municipalities can continue to provide services and make investments.
The federal government can do this by giving local authorities a maximum of certainty on communal income and expenditure on which it has influence, the VVSG feels. It can also provide structural co-financing for the pensions of statutory public servants employed by local authorities, according to the association.
The federal government should also finance the new sectorial agreement for the police and fulfil its commitment to defray 50% of the cost of the fire service, it adds.
The Flemish government, for its part, should make the Communes Fund inflation-resistant by increasing its annual growth rate - normally 3.5% - if inflation is higher, the VVSG urges.