At the Republikon Institute’s local government conference, Gergely Karácsony noted that the city has received a 60-day extension from the state treasury to pay the central government’s solidarity contribution, but this extension expires next week.

No decision to extend the deadline or find another solution to the issue is apparent based on current knowledge, he added.

He spoke of “brutal financial pressure” Budapest has faced in recent years, noting the city’s companies and basic infrastructure were under mountains of debts. Even so, his administration had decided against reducing public services, he added.

The mayor also said the system built on Budapest’s 23 districts had decades-old traditions and important values, but he saw a need for “fine-tuning” in the relationship between the districts and the city.

He said a more significant transformation was needed in the relationship between local governments and the state, and it would be justified for local governments to regain previously taken-away tasks and powers, such as the maintenance of schools.

He welcomed the Budapest law proposed in the Tisza Party’s programme, which he said should enshrine the principles of cooperation between the city and the state.

However, this should also include the financing of public transport, he said, which had so far been a subject of bargaining.

Karácsony also said it was necessary to establish a public body to regulate the relationship between Budapest and the settlements in its agglomeration. This included examining which services the city could provide more efficiently than the districts, he said, citing public transport, public lighting, the capital’s major road network, sewage and water networks, and the maintenance of large green areas as examples.

Krisztina Baranyi, mayor of District IX, said local governments expected much from the change of government, mainly in the form of a partnership.

László Böröcz of Fidesz, mayor of District I, said local governments should perform tasks that address the daily problems of local residents, and it was important to rethink the distribution of powers between the city and the districts. Districts could play a greater role in the renovation of district roads and the management of green areas, he added.

Péter Niedermüller of DK-Momentum-Sociliast-Dialogue-Greens, mayor of District VII, said the city’s financial difficulties were not just a money issue, as they concerned the city’s ability to function. He stressed that it was necessary to understand that local governments were part of the state and performed tasks that improved the quality of life for citizens. Regarding the solidarity contribution, he said that in previous years, the funds had not been used for their intended purpose, so he urged the establishment of a transparent and fair system.

Baranyi also called for a fair system. She believed a completely new local government law was needed, one that addressed the tasks of local governments, the quality of services, and financing in a unified way.

Reducing the rate of the solidarity contribution could be a short-term intervention, but a deeper transformation was needed in the sector, she argued.

Böröcz said it was important to increase local government revenues through conscious and rational management even today. He called for a system that did not penalize more successful local governments, adding that increasing motivation and efficiency could help the districts and the local government sector.

Karácsony noted that the city was contesting the solidarity contribution for 2023, 2024, and 2025 in court. He said he did not see the political will to phase out the solidarity contribution, so the Hungarian municipalities association has proposed a reform that would halve the deduction rate.

He noted that the Tisza Party’s program included expanding the scope of shared tax revenues and asked the government to implement this. He said it was not right for the local business tax to play a prominent role in financing local governments, and a better-functioning system would fundamentally require the gradual return of 10% of personal income tax and the vehicle tax to local governments.

In his opening speech, Gabor Horn, chairman of the board of trustees of the Republikon Foundation, expressed confidence that the change of government would restore local governance.