State Boosts Local Funding to €92.9M Amid Municipal Reform

In a significant overhaul of local governance, the reform of Local Government set to take effect on July 1st will see an increase in state funding to municipalities, rising from €70.9 million last year to €92.9 million. This initiative is part of a broader strategy to streamline municipal operations by reducing the number of municipalities from 30 to 20, while simultaneously boosting their financial support by €22 million. The reform is projected to further increase funding to an impressive €117 million by the year 2025.

In the transitional period, during the first half of 2024, the existing 30 municipalities will receive a collective sum of €35.4 million in state funding. This includes €8.7 million as compensation for the discontinued professional tax and €1.09 million as funds replacing the long-abolished Diapylia.

From July through December, the newly established 20 municipalities will benefit from a total of €58.8 million in state funding. The distribution of these funds will adhere to specific criteria, taking into account factors such as population size, density, geographic area, and per capita income within each municipality.

The Ministry of Interior anticipates that this new allocation method will promote fiscal equilibrium among local authorities by aligning funding with the actual needs of each jurisdiction.

As part of the detailed financial plan, Nicosia Municipality is set to receive €9 million in state funding, followed by Limassol with €8.1 million, and Strovolos at €4.9 million. Other municipalities, including Larnaca and Lakatamia, will be allocated €4.8 million and €3.1 million respectively. The distribution continues down to Lefkara, which is slated to receive €1 million.

This recalibration of municipal funding through local government reform represents a strategic effort by the state to ensure that the streamlined municipal structure is adequately supported, fostering an environment where local governance can thrive and better serve their communities.

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