Municipal Fund Act

Financial aid for municipalities

Around a third of the 171 local authorities are municipalities in transition.

(Bild: www.viennareport.at)

The new Municipal Fund Act is intended to ensure the long-term liquidity of financially troubled municipalities. For the time being, the fund is endowed with 5 million euros. 

Financially speaking, more and more municipalities are up to their necks in water. Around a third of all 171 municipalities will not be able to balance their budgets in 2025. Falling revenue shares and rising personnel costs are repeatedly cited as the cause of the emergency situation. The state now wants to help the ailing municipalities with a municipal fund law. Located in the state holding company, the fund will initially be endowed with 5 million euros, announced Deputy Governor Astrid Eisenkopf (SPÖ) and SPÖ Club Leader Roland Fürst.

The law should not be seen as a safety net, but rather as a rescue package to prevent a severe impact.

Landeshauptmann-Stellvertreterin Astrid Eisenkopf

According to initial estimates, between 15 and 20 municipalities could be eligible. It is hoped that the measure will ensure the long-term liquidity of the affected municipalities until they are able to stand on their own two feet again after a few years, according to Eisenkopf.

Deputy Governor Astrid Eisenkopf and SPÖ Club Chairman Roland Fürst

(Bild: SPÖ Burgenland)

If a municipality makes use of the financial aid, the municipal council must decide on this. In addition, a concept for budget consolidation is required. This must determine how high the financial requirements are, how long support is required and how coherent and comprehensible the measures are. On this basis, it is decided whether the fund will take over repayments or even complete loan liabilities of the municipality. Municipal property, such as real estate, can also be transferred to the fund.

Transparency: fund with supervisory board and advisory board
In addition to the fund's supervisory board, an advisory board - made up of representatives from the Association of Municipal Representatives, the Association of Municipalities and the Association of Towns - will also be established. 

The Federal Austrian People's Party is leaving behind a political shambles and a catastrophic financial situation that will have a massive impact on municipalities.

SPÖ-Klubobmann Roland Fürst

In the view of the SPÖ, the ÖVP at federal and provincial level is to blame for the financial plight of the municipalities. Club chairman Roland Fürst attested to the federal government's "disastrous financial and economic policy". He also criticized the rejection of the "municipal relief package" offered by Governor Doskozil (SPÖ) by the provincial ÖVP.

Opposition criticizes the draft law
ÖVP parliamentary group chairman Markus Ulram spoke of a "patchwork instead of real help". According to Ulram, the law is inadequate and belated and a mere safety net that does not solve the core problems of the municipalities. The FPÖ welcomes the support of municipalities in principle. "However, the draft is completely unsuitable for achieving this goal," criticizes FPÖ Club Chairman Johann Tschürtz. One of the main problems lies in the planned location of the fund at the holding company. "This construction is beyond the right of members of parliament to ask questions," says Tschürtz.

The law is due to come into force on 1 January 2025, before which it still has to be passed by the provincial parliament.