75% of Dutch municipalities expect financial problems; €5.2 billion shortfall by 2029

About three-quarters of Dutch municipalities expect a joint deficit of 5.2 billion euros on their 2024-2028 multi-year budgets, according to research by the accounting firm BDO into the financial health of 342 Dutch municipalities. BDO noted major differences between municipalities. About a quarter of municipalities expect positive budget figures, up to a joint surplus of 1.4 billion euros.

The budget deficit amounts to a net of 3.8 billion euros. According to BDO, the multi-year budgets are closely linked to the consequences of 2026, which the accounting firm called “the ravine year.” In that year, the government contributions per inhabitant for municipalities will decrease significantly, as a result of which they will receive over 2 billion euros less.

BDO calculated that municipalities achieved a positive result of 1.7 billion euros in 2023. That year, a quarter of municipalities faced a budget deficit. For next year, BDO predicts a deficit of over 1.4 billion euros in total. Last year’s research still assumed a deficit of 1.1 billion euros in 2026. In addition to a lower contribution from the government, municipalities will also receive many new tasks from the government in the coming years, such as improving debt assistance and getting homes off the natural gas network.

Chairman Marc Steehouwer of the Government sector group at BDO noted that municipalities deal with deficits in different ways. He spoke of a “fragmented financial picture,” partly because possible cutbacks are not always concrete yet. “At the same time, we see that municipalities have a common challenge to get the balance between income and expenditure in order. As long as income from the government is disappointing and the costs of youth care, in particular, continue to rise, municipal finances will remain under pressure,” said Steehouwer.

Meanwhile, municipalities are uncertain about their financial prospects. They are still hoping for extra money from the government, but have also had more money left over in recent years, Steehouwer explained. According to BDO, municipalities had a total of 41 billion euros in reserves at the end of 2023. At the same time, making decisions about cutbacks is becoming more difficult with the municipal elections of 2026 approaching. “Waiting is no longer an option,” said Steehouwer. “Take action, be careful when implementing measures, and use available reserves to bridge the gap.”