Dutch municipalities expect budget deficit of 1.1 billion euros in 2026

Municipalities together expect to have a budget deficit of 1.1 billion euros in 2026, reports accounting firm BDO. Municipalities will receive less money from the government that year but still have the same number of tasks. Municipal staff shortages also make carrying out all their functions more challenging in the coming years.

Every year, BDO looks at the financial position of all Dutch municipalities. The organization looked at the annual accounts for 2022 and at the budgets up to and including 2027. Most municipalities do not appear to have financial problems until next year. Over nine in ten municipalities had a surplus in 2022, and good results are also expected for 2023.

But in 2026, municipalities together will receive approximately 3 billion euros less from the government. The following year, municipalities also expect to fall a billion euros short. “The tasks and responsibilities of municipalities are increasing while the financial resources are decreasing. The balance is lost,” said Rob Bouman of BDO.

Of the over 340 municipalities, 284 expect a deficit before 2026, according to the study. Last week, the Association of Dutch Municipalities (VNG) reported, based on this BDO study, that over eight in ten municipalities think they won’t be able to complete the budget in 2026 and 2027. There are only 57 municipalities that expect green figures.

The municipalities’ uncertainty remains high due to, among other things, the fall of the Cabinet last year and the coming budget cuts. “There is no agreement yet on the elaboration of the new financing system from the government. A long formation process could even mean that municipalities do not yet have clarity about the financial perspective from 2026 when drawing up the 2025-2028 budget,” Bouwman warned.

Municipalities must also take into account that even less money will come from the government. According to Bouman, local governments must set priorities and make budgets as realistic as possible. “Municipalities have to make choices. Not only based on finances but given the tightness on the labor market, also on feasibility.”