Around half of the Swiss cantons expect a deficit for 2025
Published: Sunday, Oct 13th 2024, 09:40
Updated At: Sunday, Oct 13th 2024, 09:50
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The cantons have presented their budgets for 2025 in recent weeks. The situation is very different. Around half of the cantons are expecting to be in the red and the other half in the black.
The financial policy situation of the cantons is mixed, said Ernst Stocker, President of the Conference of Cantonal Finance Directors (FDK), at the request of the Keystone-SDA news agency.
The canton of Vaud has the largest deficit, with a deficit of CHF 303 million. This is the largest deficit in 25 years for the western Swiss canton.
The cantons record the highest expenditure in the areas of education, social affairs and health. Costs have risen sharply here in various cantons in recent years.
Cost-cutting measures in the cantons
Not only the Confederation, but also numerous cantons have planned or already implemented austerity measures to bring their budgets back into balance. According to the President of the FDK, the vast majority of cantons have budget rules similar to the federal debt brake. Many cantons would have to respect the financial legal framework and make savings efforts.
The canton of Basel-Landschaft wants to save 393 million francs by 2028. This will be made possible, among other things, by cutting 352 cantonal jobs, it said. The job cuts will not be made through redundancies, but by not reappointing staff. In the canton of Solothurn, 113 measures are expected to save CHF 60 million per year.
High investment requirements
The fiscal situation of the cantons is developing positively in many places. The canton of Zug, for example, recorded higher income due to strong population growth and high-tax inward migration. The canton of Bern is expecting the largest surplus with a plus of CHF 246 million. In its budget, the canton is now planning to reduce taxes for natural persons. The canton of Neuchâtel is planning to do the same.
According to the FDK, however, there is no general trend towards tax cuts. The canton of Thurgau decided to reduce its tax rate by eight percent in 2021. However, the cantonal government is now proposing to the cantonal parliament that this be reversed. The canton of Eastern Switzerland has presented a deficit of CHF 15.9 million.
In the canton of Neuchâtel, the salaries of public sector employees are to be fully adjusted in line with inflation. For its part, the canton of Geneva wants to support people affected by poverty, cover the costs of the asylum system and make public transport completely or partially free of charge.
Some cantons explicitly refer to their high investment needs, as Stocker said. Investments are necessary in the areas of infrastructure and digitalization, for example. However, new debt would be necessary in order to make these investments. This is the case in the canton of Zurich, for example, which plans to invest CHF 5.1 billion by 2028. However, the canton is making savings, meaning that the increase in debt can be reduced by half to CHF 1.5 billion compared to previous plans.
Uncertain profit distribution by the National Bank
The canton of Nidwalden is budgeting a deficit of CHF 2.2 million for 2025. Compared to the previous year, the result is CHF 24.6 million better due to higher tax income and expected funds from the Swiss National Bank (SNB).
The canton of Fribourg is hoping to receive CHF 17.5 million from the SNB from the redemption of the sixth series of banknotes. Bern, Jura and Solothurn, on the other hand, are not expecting a profit distribution from the SNB.
"Due to the SNB's existing balance sheet loss of CHF 53.2 billion at the end of 2023, a profit distribution to the Confederation and cantons is also uncertain for the SNB's 2024 financial year," said FDK President Stocker. The SNB would have to generate profits in the remaining two quarters and eliminate the balance sheet loss for a distribution to be possible. The annual financial statements on December 31 will be decisive.
At the time the budgets are adopted, it is not yet possible to say whether they will be adhered to in the actual annual accounts. The budgets adopted by the cantonal governments are not yet the final step in the process. They are only finally adopted by the cantonal parliaments - usually in November and December.
©Keystone/SDA
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