For the second time in a row, the city council in Ghent must make major savings. ‘It would not have been necessary if the index adjustment of the Municipal Fund had followed inflation,’ says mayor Mathias De Clercq.
Almost all Flemish cities and municipalities are under severe pressure from the financial crisis. Not least Ghent, which has a high debt burden. For the second time in six months, the city must be saved. Just before the summer, the city council had to look for 81 million euros and this week a new round of savings was completed, which is good for another 21 million euros. “Ghent and all other Flemish cities and municipalities are facing the biggest economic challenge in fifty years,” says Ghent mayor Mathias De Clercq (Open VLD). “We must not fool people into thinking that things will get better soon, because that is not the case. Therefore, despite the difficult circumstances, we have decided to create a buffer of 10 million euros. In this way, we are better equipped against possible new shocks that still come our way.’
Why is it that almost all Flemish cities and municipalities are in very bad papers?
Mathias De Clercq: The problems started during the covid period. Not only did we have a lot of extra expenses then, we also had a lot less money coming in. For example, we lost 10 million euros by introducing a temporary exemption from business taxes. Catering operators also did not have to pay terrace fees, because for a long time they could only receive their customers outside. In addition, the income from our museums and sports centers largely disappeared, and far less parking money came in. It has had a major impact on the city’s economy.
And the city treasury still hasn’t gotten over it?
De Clercq: No, because the pandemic was not over before the war in Ukraine started. As a result, thousands of refugees have ended up all over Flanders. And who took care of all those people? Towns and cities, of course. We received financial support for this from the Flemish government, but it does not cover all costs. In Ghent, we have already spent one million euros more on the Ukraine crisis than we received from Flanders. This is primarily because we want to receive all these Ukrainians in decent buildings in a dignified manner. Due to the war in Ukraine, energy and commodity prices have also gone through. Today, families have to pay a lot more to heat or renovate their homes, and it’s no different for a city. The annual bill for our public lighting alone has meanwhile risen from 2.8 to more than 5 million. And as if all that wasn’t hard enough, we’re also now facing massive inflation, resulting in a rapid increase in city employee wages. We have already carried out five wage indexations this year, and according to the Planning Office’s forecasts, at least two more will follow next year.
The Flemish cities are facing the biggest economic challenge in 50 years.
Why does Ghent already have to cut back sharply for the second time this year?
De Clercq: We were simply the first city council to understand the seriousness of the situation. As a result, we have already implemented a budget change for this year before the summer. Then we would have to find no less than 81 million euros. We could raise the largest part of that amount from our own activities as a city council. However, because inflation has been unusually fast in the meantime, we had to do another budget exercise to find 21 million euros. It was a very big challenge, but I also see it as an opportunity.
De Clercq: In difficult circumstances like these, you need to make choices that clearly show what you stand for. This time, too, we first investigated how we could save on our own operations before looking at other domains. It was clear from the start that we would not touch healthcare, education, childcare and security, among other things. We have also very deliberately not cut back on youth work and culture.
Unlike Antwerp, you mean?
De Clercq: Culture is deeply embedded in our city’s DNA and is also inextricably linked to our economy. Since the sector has already had a very difficult time during the pandemic, we certainly did not want to cut into the skin of the many cultural organizations and initiatives in our city. This also shows what Ghent stands for.
So what will be saved?
De Clercq: One of the interventions we are implementing is that the city marketing fund, which supports all kinds of measures, will be scrapped. That is good for a saving of 250,000 euros. As in many other Flemish cities and municipalities, we must also save on our public lighting. Soon the lights will be turned off from Sunday to Wednesday evenings between midnight and five in the morning. It saves us a million euros.
Is the Flemish government doing enough in the meantime to help the cities and municipalities?
De Clercq: The numbers speak for themselves. The municipal fund is indexed annually by 3.5 percent, while inflation is currently around 12 percent. The Flemish government has intervened, but it does not close the gap at all. Since Ghent receives 40 percent of its income from the Municipal Fund, we are therefore faced with a major problem. This of course also applies to other cities and municipalities. That is why the mayors of the central cities have recently called on the Flemish and federal government to support us much better. If the indexation of the Municipal Fund had followed inflation, this round of savings would not even have been necessary. If we want to avoid cities and municipalities in the coming period having to implement savings that are really tangible for the citizens who live there and the companies and organizations that are active there, then both Flanders and the federal level must step up their game.