Weakened financials of Brussels municipalities complicate next legislature

Brussels' local authorities are entering the new legislative period with a weakened financial situation, according to the 45th Belfius Local Finance study. For the future, the administrations are thinking about controlling expenditure rather than increasing taxes.

As a result of successive crises, the financial balance of the Brussels municipalities has deteriorated and their reserves have been eroded. According to Belfius, 11 of the 19 municipalities are currently covered by a management plan and the number of structural deficits keeps increasing.

In the last term of office, the municipalities were confronted with a sharp rise in personnel costs, due to wage indexation, increased pension costs for statutory personnel and salary revaluation.

Spending on statutory staff in particular has put municipalities under financial pressure. In Brussels, these permanent civil servants account for 36.2 per cent of total municipal staff, compared with 20.1 per cent in Wallonia and 21.3 per cent in Flanders.

Crises increase expenditure

The rise in expenditure was mainly due to the sharp rise in construction and material costs, the COVID-19 and energy crises, and interest rate hikes. Expenditure by the Public Centre for Social Welfare (OCMW/CPAS) also increased due to the influx of Ukrainian refugees.

The main financial challenges for the next administration are pension costs, security, social assistance and energy transition costs. In order to keep the budget in balance in the coming years, the local administrations in the Belfius survey give priority to measures that help control expenditure, such as staff, investment and operating expenditure, rather than increasing tax rates or introducing new taxes.

^{The city hall of the Koekelberg municipality. © BELGA PHOTO THIERRY ROGE}