Dutch cities face high deficits, trouble with welfare benefits

Large Dutch municipalities are going to face higher deficits from next year as the national government begins cutting welfare budgets to municipalities. While some experts argue the new budget will encourage cities to get people off benefits, it also means a 25 million euro cut in money disbursed to Amsterdam, equivalent to a 4.6-percent budget slash, the Volkskrant reported on Monday.

A policy shift under Prime Minister Mark Rutte's second cabinet means that municipalities can no longer lean on the national government for support when the need for social assistance grows beyond the amount expected. "That will mean municipalities with deficits have too many people on welfare. The problem is that the new system is still not perfect, and therefor municipalities may suffer," said policy supporter Martin Heekelaar from consultancy firm Berenschot. In the new system, municipalities will have to make up the shortcoming.

The major cities in the Netherlands will be hit hard, the newspaper reported. The current data shows that Groningen will face an 11-percent cut equivalent to 16 million, while Utrecht will lose out on five million, or 4.4 percent. A four million cut will be seen in Tilburg, Venlo and Arnhem, equating to between four and nine percent in budget cuts.

New budgetary allocation will now be done largely based on how municipalities stand in social and economic terms. Included in the calculation is the age and education of the population count, number of disabled and the numbers of social housing tenants.

Arguments have called the new method insufficient, and poorly developed. With budgets changing by the millions from year-to-year, it has become more like a lottery, said Rene Paats, the chair of Divosa, an association of municipal managers working in social inclusion, employment and income issues. "It is irresponsible to continue in this manner," Paats said.

Arjan Vliegenhart (SP), the Amsterdam alderman for employment, income and participation has expressed concern for the city's many vulnerable inhabitants as they rely on the council for employment assistance to make ends meet.