Cyprus government proposes new funding structure for municipalities

The Cypriot Ministries of Interior and Finance have proposed a new financial formula to address the demands of the Union of Municipalities. The plan involves consolidating existing subsidies into a single annual package totaling 144 million euros. This figure includes the standard 117 million euro state grant established in 2022, plus 15 million euros for primary road maintenance and 12 million euros to compensate for licensing revenue losses. The government has agreed to adopt the Union of Municipalities' estimates regarding road maintenance costs. A key feature of the proposal is a mandatory review of the funding every three years, with the first revision scheduled for 2027 based on state expenditures. This proposal aims to reduce administrative costs and improve local government financial autonomy, following potential threats of industrial action by municipal authorities. The government has formally notified the Union of Municipalities of these changes.