Municipalities in Zeeland have limited assets

02/08/2004 10:00

In 2002 the assets owned by the municipalities in the province of Zeeland averaged 871 euro per inhabitant. Municipalities in the province of Groningen also have little capital of their own, namely 957 euro per inhabitant. The national average is 1,518 euro.

Municipal assets by province, 2002

Municipal assets by province, 2002

Municipalities in the province of North Holland have the highest capital assets, namely 2,780 euro per inhabitant. The level of assets in this province is strongly determined by the financial situation of Amsterdam.

Differences in the valuation of property

Differences in assets between municipalities may be the result of savings in the past. Furthermore there are differences in the valuation of property that play a role in this respect. Municipalities with substantial assets of their own are generally able to spend more and cushion financial setbacks.

Assets increasing less

The assets owned by the municipalities have been increasing for years. This is due to the growth rate in general payments from the municipal funds, the main source of income for the municipalities. Furthermore municipalities sold many participations over the last few years. The profits booked increased the assets. In 2002 municipal assets increased by 4 percent to 24.4 billion euro. The growth rate is not as strong as in previous years.

Municipal assets

Municipal assets

More designated reserves

An increasing part of the reserves is designated. In 1999 the share of designated reserves was 74 percent. In 2002 it was 76 percent. In 2002 municipalities were free to determine how to spend 21 percent of their assets. The rest (3 percent) was the balance of the account and the active deficits.

Increasing municipal solvability

The solvability rate is an important indication of the financial situation of municipalities. The rate increased from 29 percent in 1999 to 35 percent in 2002. Borrowed capital did not increase by as much as assets owned.

There are great differences in solvability rates among municipalities. Municipalities with 5 to 50 thousand inhabitants have an average solvability rate of more than 40 percent. The smallest municipalities and the large municipalities have far lower rates. These municipalities finance more assets with borrowed money.

Solvability rate by municipal size, 2002

Solvability rate by municipal size, 2002

Mattheus Wassenaar