Financial Equalisation Act (FAG) - Purpose (FAG)

1. This law aims to ensure balanced conditions in the tax burden as well as in the services provided by the municipal communities.

2. It shall be regularly reviewed for its effectiveness and efficiency.

1. This Act regulates

a. the annual resource equalization among the municipal communities;

abis. * the solidarity contributions to the municipal communities;

b. the hardship contributions to the municipal communities;

c. the annual compensation for burdens to the municipal communities;

d. the compensation payments between the canton and the municipal communities;

e. the transitional contributions to the municipal communities.

1. The Government Council shall establish an Advisory Commission on "Task Distribution and Financial Equalization" (short: Advisory Commission).

2. The Advisory Commission shall consist of representatives from the administration and the municipalities, and it shall provide recommendations on financial equalization matters as well as on the distribution of tasks between the canton and the municipalities.

1. The fictitious income tax rate is the sum of the income tax revenues of the municipalities divided by the sum of their income tax revenues extrapolated to 100%.

2. The fictitious wealth tax rate as well as the fictitious profit and capital tax rates are defined analogously to the fictitious income tax rate.

3. The tax capacity of a municipality is the sum of its tax revenues converted using the fictitious tax rates and rates, divided by its population.

4. ...

1. Municipalities whose tax capacity exceeds the compensation level ("donor municipalities") shall make contributions to municipalities whose tax capacity is below it ("recipient municipalities").

2. The government council shall set the compensation level for the following year by means of a decree ("financial equalization decree"). In this respect, it shall take into account the recommendation of the advisory commission.

3. ...

1. The donor municipalities contribute 15% of their tax capacity (abbreviated: contribution rate) multiplied by their population. Paragraph 2 remains reserved.

2. If the contribution rate is greater than 60% of the difference between their tax capacity and the equalization level, the donor municipality contributes 60% of this difference multiplied by their population.

3. ...

1. The recipient municipalities receive the difference between their tax capacity and the equalization level, multiplied by their population number.

2. ...

1. If the donor municipalities contribute higher amounts than what the recipient municipalities receive, the difference shall be deposited into the equalization fund.

2. If the donor municipalities contribute lesser amounts than what the recipient municipalities receive, the difference shall be withdrawn from the equalization fund.

3. The level of equalization shall be adjusted in the fiscal equalization year if the equalization fund would otherwise fall below or exceed a certain limit. The details shall be regulated by the Government Council in the ordinance.

1. Municipalities with a social assistance rate exceeding 130% of the cantonal average receive annual contributions ("solidarity contributions"). The total amount of these contributions is determined according to § 7b para. 2.

2. The individual solidarity contribution is based on the social assistance rate above 130% of the cantonal average and is reduced by 10% for each CHF 100 of fiscal capacity above the equalization level.

3. The social assistance rate is the proportion of people receiving social assistance relative to the population size.

1. The solidarity contributions are financed by the municipal communities.

2. The individual municipal contribution amounts to CHF 10 per inhabitant annually.

1. A municipality shall receive a hardship contribution from a fund ("Hardship Fund") if it would otherwise be able to fulfill all or any of its tasks only with an unreasonable burden.

2. Conditions for the allocation of contributions include an adequate utilization of self-financing options and an accounting system maintained in accordance with the Municipal Finance Ordinance.

1. All municipalities shall annually contribute to the Hardship Fund.

2. The contribution shall not exceed CHF 2.50 per inhabitant. It is determined annually by the government council based on the anticipated needs. In doing so, it takes into account the recommendations of the advisory commission.

3. Hardship contributions may not be disbursed from the Hardship Fund in excess of the existing fund assets.

1. Municipalities with above-average educational burdens receive compensation for educational costs.

2. The calculation of the compensation for the burdens is based on

a. the weighted number of kindergarten and primary school students relative to the population size, as well as

b. the population density and geographical location.

c. ...

3. ...

1. Municipalities whose social index is higher than the cantonal average, weighted by population numbers, receive a contribution as a compensation for social welfare burdens.

2. The contribution is determined by the number of index points above the cantonal average.

3. The government council regulates the definition of the social index.

1. Municipalities, whose proportion of non-settlement area to total area is greater than the corresponding cantonal average, shall receive a contribution as compensation for the burden of the non-settlement area.

2. The contribution is determined based on the area exceeding the cantonal average.

1. A total of CHF 22.68 million shall be distributed as contributions pursuant to Sections 11-13.

2. The Executive Council shall establish in the ordinance for Sections 11-13

a. the allocation of the CHF 22.68 million to the individual compensations for burdens, taking into account the recommendations of the Consultation Commission;

b. the bases of calculation and methods of calculation for the compensations for burdens.

1. As compensation for past task reallocations, the municipalities shall pay the canton

a. * ...

b. * ...

c. * ...

d. * in the year 2023 CHF 6,650,000.-,

e. * in the year 2024 CHF 4,750,000.-,

f. * in the year 2025 CHF 2,850,000.-,

g. * in the year 2026 CHF 950,000.-.

1bis ...

2. The share for each municipality is determined by its population size.

1. To compensate for past task shifts, the canton shall pay the municipalities an annual amount of CHF 950,000 starting in the year 2027.

2. The individual municipal share shall be determined based on the population size.

1. To compensate for the shift in tasks "6th Primary School Year," the canton provides the municipalities with

a. CHF 14,537,500 in the year 2015,

b. CHF 34,890,000 annually in the following years.

2. The share of a municipality is determined by the number of primary school students it has.

1. To compensate for the shift in responsibilities "EL-AHV/EL-IV," the canton shall provide the municipalities with CHF 14.3 million annually.

1bis. To compensate for the canton's EL relief through municipal care financing during the years 2011-2015, the canton shall reimburse the municipalities a total of CHF 45 million by the end of the year 2020. The payment of CHF 15 million, in accordance with the decision of the Cantonal Council dated January 28, 2016, shall be credited to this amount.

2. The individual municipal share is determined according to the weighted number of elderly residents and their economic circumstances. The government council shall regulate the details.

1. Proportional Compensation for the Advance Payment of Compensation for Loss by Canton and Confederation for Childcare Covid-19: In 2020, the municipalities shall make a one-time payment to the canton in the amount of CHF 1,604,192.-.

2. The individual municipal share is determined based on the population.

1. The Act for the Promotion of Public Transportation of April 18, 1985 is amended as follows: ...

1. The Supplementary Benefits Act to AHV and IV of February 15, 1973 is amended as follows: ...

1. The Act on Social Assistance, Youth Assistance, and Disability Assistance (Social Assistance Act, SHG) of June 21, 2001, is amended as follows: ...

1. The Financial Equalization Act of June 5, 2003, is repealed.

1. This law shall enter into force on January 1, 2010.

1. To cushion the transition to the new law, municipalities that are disadvantaged by the new regulations compared to the previous ones will receive graduated contributions from the equalization fund (in short: transitional contributions).

2. The transitional contributions are determined by the difference between

a. the financial equalization amounts actually received in the years 2010-2014 and

b. the hypothetical financial equalization amounts calculated under the new regulations in the years 2010-2014.

3. The transitional contributions amount to 80% in the year 2016, 60% in the year 2017, 40% in the year 2018, and 20% in the year 2019 of the difference according to paragraph 2.

4. The regulation enshrines the differential amounts according to paragraph 2 for the affected municipalities.

1. To mitigate the effects of the Wealth Tax Reform I, the Canton provides the municipalities with supplementary compensation to the reduced compensatory payments according to § 15a and § 15abis

a. in the year 2023, CHF 7,600,000,

b. in the year 2024, CHF 5,700,000,

c. in the year 2025, CHF 3,800,000,

d. in the year 2026, CHF 1,900,000.

2. The individual municipal share is determined by the wealth tax revenues from natural persons for the fiscal years 2018-2020.

1. As of January 1, 2019, CHF 4 million will be transferred from the Compensation Fund to the Hardship Fund.

1. The government council establishes the equalization level for the year 2023 in the Financial Equalization Order 2023.