Budget deficits loom for majority of Dutch municipalities

The majority of municipalities in the Netherlands are expected to face structural budget deficits in 2026, according to an analysis commissioned by the Association of Dutch Municipalities (VNG). This situation raises concerns about the ability of municipalities to cover their expenses and maintain a buffer to absorb setbacks.

Mid-sized municipalities in particular, with populations ranging from 50,000 to 100,000, are currently struggling to cope with this situation.

The analysis compared the annual financial statements of 308 municipalities, revealing that municipalities in all provinces anticipate a budget deficit in 2026. The least significant decrease in budget results can be observed in Zeeland and Flevoland, but revenues are declining everywhere while expenses are rising.

In 2021, almost all municipalities still maintained a budget surplus. By 2026, this scenario is expected to change significantly, with the majority of municipalities anticipating shortfalls. The 32 largest municipalities predict the largest negative balances. According to the analysis, municipalities with populations ranging from 20,000 to 40,000 are still doing best.

The VNG has warned since the coalition agreement in 2021 that the Cabinet’s approach will have a major impact on the financial situations of Dutch municipalities. The organization argued that this analysis shows that investments across all sectors will decrease if the Cabinet does not quickly come up with a structural and adequate solution. This situation concerns key areas for the government, such as housing, energy transition, and climate adaptation.