Hungarian local governments in big trouble, Budapest could also have a freeze break

Municipalities are unable to cope with soaring energy prices, and without state support, a “freeze break” may occur. At the end of the year, the municipality of the capital will certainly have unpaid bills. According to Mayor Gergely Karácsony, other municipalities will face a similar situation.

Jánoshida is in big trouble

Béla Eszes, the mayor of Jánoshida (Jász-Nagykun-Szolnok county), said the following during a discussion of the Association of Hungarian Municipalities on Friday:

“There are not enough trees in Hungary to allow all the municipalities and families that used to use gas heating to switch to wood. But even if there were, gas systems have been installed in recent years in tender-funded modernization projects. But they cannot afford the market price of gas and electricity,” writes Népszava.hu.

No electricity contract

Two years ago, the village of 2,500 people replaced its old wood-fired boiler with modern gas heating in the kindergarten and crèche for the elderly. Now, however, it turns out they can’t afford the gas bill, the article says. The 100-seat kindergarten cannot be released, but the elderly are transferred to the village hall.

But they also cannot sign the electricity contract, because the price of 65 HUF (EUR 0.16) per kilowatt-hour has now increased to 380 HUF (€0.95), so the cost of public lighting, so far at 3.5 million HUF (€8,720), would be 20 million HUF (€49,800) for one year, while their income from corporation tax does not exceed HUF 40 million (€100,000).

People are on social assistance

But there is also a big problem with public catering: the state subsidy for this had to be supplemented with 10 million HUF (€24,920) per year, now this sum must be increased to 20 million HUF (€49,800), even though prices have already been raised four times. The burden on families can no longer be borne and they can no longer afford inflation and rising heating costs. People who had never applied for social assistance before are now applying for it.

So far, an average of 200 families out of Jánoshida’s 1,000 households have signed up for the 200 cubic meters of social firewood, and this year that number has risen to 400.

Coercive measures – there is no plan B

“Municipalities are trying to move forward with various coercive measures, such as closing swimming pools, reducing decorative lighting and removing non-compulsory services,” said György Gémesi, Mayor of Gödöllő, President of the Association of Hungarian Municipalities at the meeting. “Municipalities are unable to cope with rising energy prices, and if there is no public support, there will be a freeze break. There is no plan B,” Gémesi said.

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Laura T. Thrasher