It is a recurring complaint from not all mayors: the Flemish Municipal Fund is unfairly distributed among the municipalities. A resident of Ghent receives twice as much Flemish support as a resident of Bruges; an Antwerp resident receives more than four times as much as a Vilvoorde resident. Overijse even receives only a tenth of Ghent per inhabitant.
There is a chance that a reform of the Municipal Fund will be the subject of negotiations for the next Flemish government. To objectify the debate, Minister of Internal Affairs Gwendolyn Rutten (Open VLD) had a study carried out into the effects of a possible reform by the Administrative Innovation Support Center (UGent and KU Leuven).
The Municipal Fund is a crucial financing stream from the Flemish Region to the municipalities: approximately one fifth of a municipality’s income comes from it. In 2023 this amounted to 3.1 billion euros. Big cities have different needs than small villages. It was therefore determined that 41 percent of the fund is reserved for the 45 larger cities and coastal municipalities, which received an extra boost due to the costs of tourism. Thanks to this system of advances, Antwerp and Ghent together receive almost a third of the total fund – Antwerp gets 20 percent, Ghent 10 percent, but Ghent gets the most per inhabitant. The rest is distributed via objective parameters: municipalities receive more if they fulfill a central function, if they have less income from taxes, have many people on a living wage, or make efforts not to fill up all public space.
The big ones get hit
The researchers looked at the effects of 27 simulations. For example, the system with advance payments can be replaced by basic financing. A distinction can then be made based on the functions that a municipality must fulfill (the level of equipment). In almost all scenarios, the major cities face a decline in the allocation per inhabitant. Regional cities are also often hit hard. For the majority of the simulations, rural municipalities and the “regional urban city edge” (such as Vilvoorde) are improving.
If the entire reform has to remain budget neutral, Antwerp, Ghent and co. have to give up for the benefit of the little ones. The question is whether the Flemish parties will be prepared to do this – the N-VA provides the mayor of Antwerp, Open VLD the mayor of Ghent, CD&V the mayor of Bruges… It does not seem to be an immediate cost-cutting exercise. If one wants to give more to the little ones, without hurting the big ones, the researchers calculate that an extra half a billion euros is needed every year. Not bad, also considering the Municipal Fund increases by 3.5 percent annually.
Two years ago, the thirteen mayors of the central cities knocked on the table of Prime Minister Jan Jambon (N-VA) because the index did not follow the high inflation. “The cities are currently becoming rapidly impoverished,” it said at the time.
More transparency
The researchers do not put forward a scenario themselves, that will be a political choice. They do point out the importance of objective criteria and more transparency, including by resolving the tangle of additional grants in the basic grant.
“It has to be fairer,” says Minister Rutten. “There is more to Flanders than just Antwerp or Ghent. This includes food and drinks so that we can negotiate.”
CD&V stands up for the countryside and believes that resources should be distributed more fairly. Open VLD also believes that the distribution key is outdated and that the next Flemish government should revise the fund. Vlaams Belang says it wants to give more autonomy to the municipalities, “particularly in rural areas where services are disappearing”.
Vooruit, Groen and the PVDA do not agree that the Flemish government should give more money to small municipalities and less to large ones. “What matters to us are more efficient cities and municipalities with sufficient strength,” says Vooruit. Groen believes that both small and large municipalities should receive extra support.
The N-VA believes that the parameters of the Municipal Fund should certainly be more transparent, but Antwerp Alderman for Finance Koen Kennis previously made it clear that he did not want to know about a redistribution. “A large city like Antwerp has to deal with poverty, asylum seekers, security and other costs. I invite those other municipalities to take over our problems. Then I think they will beep differently.”
