Budapest Mayor Karácsony: Plans to park municipalities’ savings at State Treasury harms their financial autonomy
A planned decree of the financial ministry that would oblige local authorities to keep their savings at the State Treasury is “once again” in breach of municipalities’ financial autonomy as enshrined in the Fundamental Law and the European Charter of Local Self-Government, Budapest Mayor Gergely Karácsony said on Tuesday.
Karácsony expresses dislike
“When this government is in trouble … their usual solution is to reach into others’ pockets. They don’t ask themselves whether they should … buy office buildings from the prime minister’s son-in-law for 700 billion forints. They rather reach into the pockets of Hungarian localities,” Karácsony said on Facebook.
Karácsony said the plan was yet another move to “dismantle the autonomy and independence of local authorities” who have been banned from taking out loans and their revenues “syphoned off” through the solidarity contribution. “Now they can’t even handle their remaining monies freely,” he said.
He said municipalities should be allowed to decide for themselves where they want to keep their money. He stressed that he wasn’t calling for the savings to be held at commercial banks but rather for municipalities to decide freely where their savings would be safest, and whether “their money is safe with a state that keeps trying to put its hand on it,” he said.
He called on the government to “start shedding transparency on itself” by accounting for the revenues from the solidarity contribution and “how the money taken from Budapest reached small localities, which are themselves under an increasing burden year by year.” The government should also react to a report by a European Council expert saying that the monies “did not reach small localities but disappeared in the bottomless pocket of the government,” he added.
“Budapest insists that local authorities should maintain their financial independence and basic economic freedom, even if the municipality itself is not impacted by the new austerity measure, as the government has long taken away its savings by raising the solidarity contribution 12-fold,” Karácsony said.
About the legislation
Draft legislation that would require local governments to keep the larger part of their balances on accounts with the State Treasury serves the more efficient management of public monies, the National Economy Ministry said in a press release on Tuesday.
The draft legislation, which has been published for public consultation, does not impact municipal councils’ financial autonomy or day-to-day operations, the ministry said.
The draft bill would require the Budapest metropolitan council and the capital’s districts as well as the local governments of county seats and cities with populations of 50,000 or more to comply with the measure from October 1, 2025. Compliance would be required of other settlements, gradually, from the start of 2027 and the start of 2028.
The measure aims to ensure a larger share of public monies is on Treasury accounts, optimising state financing and reducing financing costs, the ministry said.
The ministry noted that local councils could subscribe exclusive government bonds that pay a coupon level with the central bank base rate: 6.50pc at present.
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