The combined cashflow-based deficit of local councils in Hungary reached HUF 247.7 billion in 2010, swelling from HUF 97 billion in Q1-Q3, the National Economy Ministry said on Tuesday.
The ministry called the deficit “surprising” and said it was HUF 57.7 billion over the HUF 190 billion target established when the government set the 3.8%-of-GDP general government deficit target for 2010.
Data received thus far shows revenue from local taxes, especially from the local business tax, but also from vehicle tax and fees, was less than expected, the ministry said. Local councils take in about HUF 4,000 billion a year, but differences in accounting practices at local councils and the fact their accounts are at commercial banks rather than the Treasury mean the cashflow-based data do not give a precise picture, it added.
The central government has little chance to affect the economic management of Hungary's more than 3,000 local councils under current regulations, the ministry said. Local governments may take out loans not only for investments but for operating costs too, it added.
The ministry said it is examining ways to establish more precisely the expected deficit of local councils' deficit beforehand. (MTI-Econews)