The Interior Ministry has rejected claims that the government is shifting the cost of local government reform onto residents, describing assertions made by the Union of Municipalities as unfounded.
In a detailed statement issued on Saturday, the ministry responded to the union's decision to reject a government proposal on the mechanism for adjusting the annual state grant and to announce protest measures.
The ministry said the state has significantly increased funding for local authorities while also absorbing a substantial share of the costs arising from the implementation of the local government reform.
It recalled that the €117 million annual state grant established under the Municipalities Law of 2022 was incorporated into the legislation during discussions on local government reform and with the agreement of the Union of Municipalities.
According to the statement, the government was the first to acknowledge that state funding could not remain permanently fixed and should be adjusted to reflect economic and fiscal developments, including inflationary pressures.
For that reason, the Interior Ministry, in cooperation with the Finance Ministry and following consultations with the Union of Municipalities, developed what it described as an objective and predictable adjustment mechanism.
In addition to the €117 million grant, the government approved, following requests by the Union of Municipalities, an extra €15 million annually for the maintenance of primary road networks and €12 million annually to compensate for revenue losses linked to development permitting.
The ministry noted that the €15 million allocation was based on a study conducted by the Union of Municipalities itself and was five times higher than the body's initial estimate of €3 million.
Under the ministry's proposal, the three grants, €117 million, €15 million and €12 million, would be combined into a single annual state grant worth €144 million, securing those funds and meeting a request made by the union.
As a result, total state funding for municipalities would rise to €144 million, compared with €70.8 million previously, representing an increase of 103.4%.
The ministry said this amounted to a doubling of overall state support for municipalities.
Regarding the proposed adjustment mechanism, the ministry said it provides for a statutory revision of the grant based on an objective fiscal indicator linked to the course of the state's net primary expenditure.
The aim, it said, is both to preserve the real value of state support for municipalities and to ensure compatibility with the state's fiscal capabilities and obligations.
Based on the proposed mechanism, total state funding is expected to increase from €148 million in 2027 to €160 million in 2030, an additional €12 million.
The ministry added that the three-year adjustment cycle would allow municipalities to know in advance the level of state funding they will receive and to plan their financial and operational needs with greater certainty.
"The government has demonstrated in practice that it supports local government reform and the financial sustainability of municipalities," the statement said.
It added that this support is reflected in the doubling of state funding, the assumption of additional financing obligations and the state's continued significant contribution towards the implementation of development projects across municipalities.
