LThe Brussels municipalities are emerging from the mandate financially weakened by the succession of crises, Belfius revealed on Tuesday during the presentation of the 45th edition of its study. Local financesIt is not the health crisis linked to covid-19 that has the most consequences, but rather personnel costs and social assistance, according to the bank.
“The biggest impact on the finances of Brussels municipalities was the level of inflation,” stressed Arnaud Dessoy, head of Public Finance and Social Profit studies at Belfius. “That was the disruptive element, along with energy costs. The health crisis had a less significant impact.”
The Brussels municipalities have in fact been faced with an “unprecedented” increase in personnel costs due to the combined effect of the sharp rise in inflation – i.e. 10 overruns of the pivot index during the term of office –, the increase in pension costs for statutory staff and the gradual implementation from 2021 of social agreements relating to the revaluation of remuneration. Personnel costs represent more than 40% of ordinary expenditure.
Added to this are municipal interventions in favour of the CPAS, which represent on average 15% of the total ordinary expenditure of the municipalities and which have recorded a strong increase (+8.4% on average per year) during the entire mandate.
“The outlook for the evolution of pension costs is very worrying,” also pointed out Dimi Jottier, Public Finance analyst at Belfius. The accountability contribution should increase from 100 million euros today to 175 million in 2028. This will be a major issue in the next term of office, according to Belfius, which surveyed local managers for its study. It will certainly be the case for 82% of respondents and rather yes for 12%.
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Falling revenues
On the ordinary revenue side, their evolution was mainly influenced by the indexation mechanisms of many municipal revenues (taxation, Funds, subsidies), the Belfius study pointed out.
“The predominant Source of income for Brussels municipalities is taxation (52%),” Mr Dessoy noted. “Municipalities depend on taxes for the majority of their income. The other major Source of income is subsidies, which come mainly from the Brussels Region. With the municipal fund on the one hand and a whole series of subsidies allocated to pay staff or the operation of this or that service.”
The Brussels municipalities thus collectively generated a slight deficit of 15.4 million euros for the financial year.
“The cushion available to municipalities has shrunk: from 200 million in 2019, it has fallen to 58.5 in 2024. This is not yet a dramatic situation, but the situation is tense,” Arnaud Dessoy observed, adding that “10 municipalities are in deficit and only 9 are balanced or in surplus. The overall surplus is now only 58.5 million, which represents barely 2% of revenue, while it is more like 5, 6 or 8% in the other Regions.”
“The most problematic situation affects the municipalities close to the canal (Anderlecht, Forest, Schaerbeek, Molenbeek), four municipalities which have a deficit situation: with a lower tax revenue, a larger allocation for the CPAS, and an economic activity which tends to move outside the municipality. As a result, the property tax is lower there,” Arnaud Dessoy added.
According to the municipal managers interviewed during the survey conducted by Belfius, the three biggest financial challenges for the next term of office are changes in pension costs, security costs (police zone), social assistance and the energy transition.
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