Today, Tuesday, July 1, the Council for Public Administration (ROB) presented its advice in the Committee for Internal Affairs. Making progress with co-management addresses the information position of parliament regarding municipal finances.
Part of the tasks of the central government is assigned to municipalities through legislation, in the form of co-management tasks. But do municipalities have sufficient financial resources to carry out these tasks? On September 11, 2024, the Senate asked the ROB for advice on whether an annual monitoring of municipal finances could strengthen the information position of parliament on this matter. Currently, it is difficult for both the Senate and the House of Representatives to verify whether the central government sufficiently compensates municipalities for the co-management tasks.
Current Situation
In 2025, total municipal revenues amounted to about € 80 billion. Approximately fifteen percent of these revenues comes from the central government through specific allocations. Just over half of the municipal revenues come from the central government via the Municipal Fund, which has a volume of approximately € 45 billion. Whether municipalities have sufficient resources for their tasks is primarily determined at the national level.
The size of the Municipal Fund is determined by the budget legislator and is part of the parliamentary budgetary rights. The objective of the central government regarding the size of the Municipal Fund is: to provide municipalities with sufficient resources so that they can adequately perform their tasks. For strong budgetary rights, parliament needs insight into the relationship between municipal tasks and the resources required for them.
A Quick Fix
The ROB confirms in its advice that insight into the balance between the tasks and financial resources of decentralized authorities is crucial. Currently, the Municipal Fund is too much of a quick fix that lacks sufficient clarity. Parliament often has to rely on signals from municipalities and particularly the central government in its judgment of whether the Municipal Fund contains enough money for all tasks. It is difficult to assess this independently. A monitor will not help in this regard, as the ROB writes. More is needed. The Senate and the House of Representatives can only effectively exercise their budgetary rights and control over the Municipal Fund when certain conditions are met.
For example, parliament must know what the co-management tasks are that are (partly) funded from the Municipal Fund. It must also be clear which budgets the House of Representatives and Senate allocate for these co-management tasks. Furthermore, it must be clear what the necessary costs are arising from an efficient execution of these co-management tasks and how the central government monitors whether these laws are implemented properly and effectively. Good insight into this requires that co-management tasks are consistently assigned. Finally, to be able to verify whether the Municipal Fund contains sufficient resources for autonomous municipal policy, parliament must also clearly understand which part of the Municipal Fund is minimally intended for that purpose.