News item | 06-04-2022 | 11:09
The distribution of the municipal fund is no longer in line with the current times due to, among other things, decentralization in the social domain and has also become complicated and opaque in the past twenty years. That is why a completely revised distribution model will be used from 1 January 2023. The aim of the revised distribution is a stable distribution model that matches the costs of municipalities as closely as possible. The model is not a terminal and will require continuous maintenance.
The current model largely dates from 1997. Since then, much has changed in the costs of municipalities, including decentralization in the social domain. As a result, there are all kinds of outdated assumptions in the current model, as a result of which the distribution of resources and the cost development of municipalities have increasingly diverged.
The investigation into the new distribution started in March 2019 and has been working together with the VNG and municipalities from the start. The research was supervised by a steering committee and accompanying committees (BZK, Finance, VNG, individual municipalities, ROB, specialist ministries). More than 100 meetings have been held, varying from information meetings with administrators and civil servants, sounding board groups with the VNG and meetings with the administrative leading group of municipalities. This new distribution model also meets the Veldman/Wolbert motion in the House of Representatives, which requested a simpler system.
Growth path of 3 years
Based on the advice of the ROB and the VNG and the responses from municipalities, the fund managers have decided to limit the transition path – the path through which municipalities grow towards the new distribution – to 3 years. The implementation of the new model will be evaluated at the end of 2025. Furthermore, the effects per municipality of the introduction of the new model will be limited to €7.50 per inhabitant in the first year (instead of the usual €15) and to €15 per inhabitant for 2024 and 2025. The total effect per municipality thus amounts to a maximum of plus or minus €37.50 per inhabitant per municipality over three years.
Financial adaptability
For the period 2023-2025, municipalities and provinces together will have an extra €3 billion available on top of the Budget Memorandum 2022 as a result of the extra resources from the coalition agreement, for the extra accres (the municipal and provincial funds move in line with government expenditure) and the scrapping the increase in the upscaling discount for this cabinet term. The first calculations based on the series 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 in addition to the other resources from the coalition agreement that will still be made available to municipalities, such as the implementation costs of climate change and resources for youth care.
Social domain and future-proofing
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 appears to follow the costs well. The analysis for 2020 is currently taking place. This will be completed by the end of April. This analysis will take place annually and, if necessary, the model will be adjusted as necessary.
Living world versus systems world: financial capacity of municipalities
It is important that municipalities with a limited financial capacity and a low socio-economic status are and remain sufficiently resilient. This also examines the elaboration of the coalition agreement for these municipalities. For these municipalities there will be an adjusted transition path for the period up to and including 2025. Since the final effect of the coalition agreement will only be known after the decision-making Spring Memorandum, and the analysis of the 2020 social domain will also be completed, these municipalities will be announced in May.
Research agenda
The ROB and VNG see an improvement in the new model compared to the current model, but emphasize that further research and continuous maintenance is needed. The ROB, the VNG and municipalities will remain closely involved in the implementation of the research agenda proposed by the ROB. In addition to a supervisory committee, a steering group will be set up for each investigation, including the ROB, the VNG and representatives of municipalities.