Dutch municipalities plan 6% higher spending in 2026 despite looming funding shortfall

Municipalities are expected to spend nearly 6 percent more this year compared with a year earlier, according to Statistics Netherlands. The total budgeted expenditure for 2026 is 84.6 billion euros, an increase of roughly 4.6 billion euros from the previous year.

Spending is increasing across all municipal policy areas, with the biggest rise in social services, climbing from 20.5 billion to 22.1 billion euros, a 7.6 percent increase. These costs cover areas such as youth care, the Social Support Act (Wmo), and refugee assistance. Expenditures on participation and income support programs are also up, by 6.2 percent.

This year’s rise in budgeted spending is smaller than in the past three years. Statistics Netherlands chief economist Peter Hein van Mulligen suggests lower inflation could be a factor. “Spending increased last year mainly due to higher labor costs, but with reduced inflation, wage growth is slower this year. That’s one reason among several,” he explains.

Maarten Allers, director of COELO, adds that the slower growth cannot be attributed to a single cause. “There are likely 342 different reasons,” he notes.

Municipalities seem once more not to be preparing a reserve for the so-called “cliff year” in 2028, initially planned for 2026. Starting then, they will get less funding from the national municipal fund, even though their obligations remain the same.

Cutting spending now could help build a buffer, but Van Mulligen says it would not be enough. “From 2028, municipalities will face structurally lower funding, so the financial impact is too large for a buffer to suffice,” he explains.

Van Mulligen says that starting in 2028, municipalities will have to either reduce expenditures or raise charges to compensate for the reduced government funding. The statistics office noted earlier this year that municipalities are planning a 6.5 percent increase in revenues for 2026, for instance, through higher parking fees or property taxes (ozb).