New distribution of the municipal fund from 2023 | news

News feature | 06-04-2022 | 11:09

The distribution of the municipal fund is no longer in line with current times due to, among other things, decentralization in the social field and has also become complicated and opaque in the last twenty years. Therefore, from 1 January 2023, a completely revised distribution model will be adopted. The goal of the revised distribution is a stable distribution model that matches the municipalities’ costs as closely as possible. The model is not a terminal and will require ongoing maintenance.

The current model dates largely from 1997. Since then, much has changed in the municipalities’ costs, including decentralization in the social area. As a result, there are all sorts of outdated assumptions in the current model, which has meant that the distribution of resources and the municipalities’ cost development have increasingly diverged.

The study of the new distribution started in March 2019 and has worked with VNG and municipalities from the beginning. The research was monitored by a steering group and accompanying committees (BZK, Finans, VNG, individual municipalities, ROB, line ministries). More than 100 meetings have been held, ranging from information meetings with administrators and officials, sounding board groups with VNG and meetings with the administrative leadership group of municipalities. This new distribution model also meets the Veldman / Wolbert proposal in the House of Representatives, which called for a simpler system.

Growth path of 3 years

Based on advice from ROB and VNG as well as responses from municipalities, the fund managers have decided to limit the transitional path – the path the municipalities are growing through towards the new distribution – to 3 years. The implementation of the new model will be evaluated at the end of 2025. In addition, the effects per. municipality of the introduction of the new model be limited to € 7.50 per. per capita in the first year (instead of the usual € 15) and to € 15 per. per capita for 2024 and 2025. The total effect per. municipality thus amounts to a maximum plus or minus € 37.50 per. per capita per municipality over 3 years.

Economic adaptability

For the period 2023-2025, municipalities and provinces together will have an extra € 3 billion. available on top of the 2022 budget memorandum as a result of the extra resources from the coalition agreement, for the extra acres (the municipal and provincial funds move in line with public spending) and the abolition of the increase in the upscaling rebate for this term. The first calculations based on the row in the coalition agreement (accres and upscaling discount) show that no municipality will suffer financially in the period 2022-2025 when the new model is introduced. This is in addition to the other resources from the coalition agreement that will still be made available to the municipalities, such as implementation costs for climate change and resources for youth care.

Social domain and future security

The model is based on data from 2017 and since then there have been many developments in the social domain. For the years 2017 and 2019, the new model seems to follow the costs well. The analysis for 2020 is underway. This will be completed by the end of April. This analysis will take place annually and, if necessary, the model will be adjusted as needed.

The world of life versus the world of systems: the economic capacity of municipalities

It is important that municipalities with limited economic capacity and low socio-economic status are and remain sufficiently robust. This also examines the design of the coalition agreement for these municipalities. For these municipalities, in the period up to and including 2025, there will be an adapted transition road. As the final effect of the coalition agreement will only be known after the decisive Spring Memorandum, and the analysis of the social domain 2020 will also be completed, these municipalities will be published in May.

Research agenda

ROB and VNG see an improvement in the new model compared to the current model, but emphasize the need for further research and ongoing maintenance. ROB, VNG and municipalities will continue to be closely involved in the implementation of the research agenda proposed by ROB. In addition to a supervisory committee, a steering group will be set up for each study, including ROB, VNG and representatives of municipalities.

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