Belgian cities and towns have shown resilience in the face of successive crises during the last electoral term, although local authorities increased their spending by an average of 5.8% per year, according to a local finance study published by Belfius.
The Belgian bank published the 45th edition of its local finance study for both Wallonia and Flanders on Thursday, with a separate report for local financing in the Brussels-Capital region due to be published in September.
The study found that local authorities faced a heavier financial burden between 2019 and 2024, due to factors such as the the loss of tax revenue during the pandemic, rebuilding after flooding, and increased energy costs. However, Belfius highlighted that local authorities were still able to grow their revenues over the same period, due to regional supports.
Overall, expenditure by towns and cities increased by an average of 5.8% over the last electoral term, peaking in 2023 when spending increased by 12.6% compared to the previous year.
Belfius noted that staff expenses for local authorities have rose by an average of 6.3% annually between 2019 and 2024, driven by factors such as wage increases and the evolution of pension charges for permanent staff.
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Meanwhile, the surge in energy costs also contributed to a rise in their running expenses, which increased by an average of 5.2% each year between 2019 and 2024.
Despite a series of crises over the period, municipal revenue increased by an average of 6.3% per year during the 2019-2024 term. This was driven by the automatic indexation of household wages, which led to increased tax revenue, and was supported by regional governments to overcome the impacts of different crises.
Looking ahead, municipal administrators said that their top three financial challenges between 2025 and 2030 will be rising pension costs, the costs of police and emergency response zones (fire zones), and expenditure on climate adaptation and energy transition.
