**Ioannou Rejects Municipalities’ Funding Claims Amid Protests**
Interior Minister Constantinos Ioannou addressed the concerns raised by the Union of Cyprus Municipalities on Monday, firmly rejecting allegations that the government is leading municipalities toward “financial suffocation.” His comments came in response to a three-hour work stoppage organized by the union, which protested against the government’s funding proposals.
During a press briefing, Ioannou announced that state funding for the 39 municipalities in Cyprus is set to increase significantly, with projections estimating it will reach €156 million by 2027. This increase follows a prior agreement made between the previous government and the union, which established a baseline funding figure of €117 million, a commitment that was later formalized in legislation passed in 2022.
Ioannou highlighted that the 2022 local government reform had already led to a 15 percent increase in state funding, now accounting for approximately 37 percent of municipalities' total revenues. He noted that this funding boost is complemented by an additional €12 million aimed at offsetting revenue losses due to the transfer of licensing responsibilities to local district governments. Furthermore, an allocation of €15 million has been earmarked for essential road maintenance projects.
In collaboration with the finance ministry, the government has proposed a mechanism to adjust state funding retroactively from 2024, which would increase the funding from €117 million to €125 million. This adjustment, along with the projected increases, aims to elevate the total funding to €156 million by 2027.
Ioannou also mentioned that the Nicosia municipality would benefit from an additional €28 million allocated for the Green Line revitalization project over the next four years. Additionally, municipalities across the country are set to receive €240 million in infrastructure funding over a five-year period.
Despite these funding increases, the Union of Cyprus Municipalities expressed dissatisfaction with the government's proposals, arguing that they would ultimately shift the financial burden of local government reform onto citizens. The union warned that insufficient funding could lead to cuts in essential services or increased local taxes and fees.
The municipalities took issue with the government’s assertion that state funding would double, claiming that the comparison was misleading. They argued that the government was referencing a reduced grant of €70.8 million, which had been frozen since the financial crisis, rather than the higher figure of €104.8 million allocated in 2010. Furthermore, they pointed out that while government revenue has seen a 132 percent increase from 2010 to 2024, state grants are projected to rise by only 42 percent by 2026.
The municipalities also expressed disappointment over the rejection of their earlier request for grants to be adjusted in line with inflation, which they believe is crucial for maintaining financial stability.
In his response, Ioannou emphasized that the funds municipalities seek are ultimately derived from taxpayers, urging local governments to recognize the source of their financial support. He reassured that the government has taken steps to address various issues stemming from the reform, asserting that municipalities have been “significantly strengthened” through the provision of additional resources and the proposed automatic adjustment mechanism for state subsidies.
As the debate over municipal funding continues, the government remains committed to its funding plans, while the Union of Cyprus Municipalities is poised to advocate for increased financial support to ensure that local governments can effectively serve their communities without imposing additional burdens on citizens.