Ordinance on Financial Equalisation (FAV) - Jurisdiction (FAV)

1. The Office for Municipalities (Office) is responsible for the execution of the financial equalization, unless a special jurisdiction is determined.

2. The departments that manage data for the financial equalization ensure the timely provision of the required data as well as the completeness and accuracy of the information.

1. The office coordinates its activities with those departments that manage data for the financial equalization. It develops the decision-making foundations for the department and for the government.

2. It executes the disbursement of contributions, excluding the contributions for social burden equalization. It invoices the financially strong municipalities for the funding contributions to the resource equalization.

3. It assesses the effectiveness of the financial equalization and prepares the effectiveness report. It commissions the municipalities to provide the required municipal data and informs them in an appropriate manner about the functioning and effects of the financial equalization.

4. It promotes municipal mergers and prepares the decisions for subsidy contributions.

1. The Compensation Year is the execution year for the resource and burden equalization. In the compensation year, the funding contributions for resource equalization (RE) as well as contributions for mountain and school burden equalization (MBE) are allocated, and the financing contributions must be paid to the RE. Contributions for social burden equalization (SBE) are allocated in the following year.

2. The assessment years are those years that serve as the basis for data determination. The relevant resources are based on the average of the last two available years, including any amendments. The relevant reference date data is based on the latest available survey.

3. In the case of municipal mergers that take effect in January of a compensation year, the assessment bases of the affected municipalities are aggregated.

1. The government determines the resource potential, the resource index, the financing and equipment contributions for the RA, and the contributions for the GLA, each by no later than the end of August of the year preceding the compensation year, and communicates these to the municipalities.

2. The contributions to be remitted by the office for the RA and for the GLA are made in two equal installment payments, due on June 20th and December 20th respectively. If this date falls on a weekend, the due date is postponed to the following Monday. The invoices for the RA financing contributions must generally be sent to the affected municipalities two months prior to the due date.

3. The municipalities' application for a contribution from the SLA must be submitted by no later than the end of April of the year following the compensation year.

1. The municipalities shall, upon request, be granted comprehensive access to the relevant calculation bases applicable to them.

1. For the determination of individual measures, the following statistical foundations serve (in parentheses: responsible agency for data provision)

a) * Income and wealth taxes, liquidation gain taxes, and expenditure taxes of natural persons, as well as withholding taxes 3 and 4 years before the compensation year (Tax Administration);

b) Profit and capital taxes of legal entities 3 and 4 years before the compensation year (Tax Administration);

c) * ...

d) * ...

e) * Tax values of real estate at a rate of 1.5 per mille by the end of the second year before the compensation year (Office for Real Estate Valuation);

f) Water royalties 2 and 3 years before the compensation year (Office for Energy and Transport);

g) Compensation payments for losses in hydropower usage 2 and 3 years before the compensation year (Office for Energy and Transport);

h) * Permanent resident population according to the federal statistics of the population and households (STATPOP) by the end of the third year before the compensation year (Office for Economy and Tourism);

i) * Relevant number of taxable persons by the end of the third year before the compensation year (Tax Administration);

j) Number of kindergarten and elementary school students according to federal student statistics and lower secondary school by residence and school location for the last completed school year before the compensation year (Office for Elementary School and Sports);

k) Total area minus the area for standing and flowing waters and other unproductive areas according to the land statistics of the Federal Statistical Office (Office for Economy and Tourism);

l) Federal statistics on the number of inhabitants in scattered settlements by the end of the third year before the compensation year (Office for Agriculture and Geoinformation; GIS Center);

m) Road classification of municipal roads according to the Federal Office for Topography (Office for Agriculture and Geoinformation; GIS Center);

n) Length of cantonal roads within localities (Department of Civil Engineering).

2. The data must be adjusted to correspond to the defined reference sizes of the fiscal equalization. Elements that do not belong are to be removed, and obvious errors corrected. The respective adjustments are to be documented in such a way that the changes can also be tracked by third parties.

3. The decisive factor is the data available at the end of March each year.

4. The agencies that manage data for the calculation of resource potential and the GLA provide the necessary information per municipality and in total by no later than the end of April.

1. Where the data foundations lead to an obviously unjust outcome, the government may make corrections after consulting with the municipality. These should be appropriately documented. The traceability must be ensured.

1. If the corrections exceed the materiality thresholds according to Article 15a of the Fiscal Equalization Act, a corrected decision by the government shall be made. Erroneous calculations must be corrected without delay.

2. The corrections may be offset against the contributions of the following year.

1. The benefits resulting from the financial equalization cannot be offset against each other, nor can they be offset with claims under other legal titles. Exceptions are corrected values pursuant to Article 7a.

1. The RA financing contributions and the RA allocation contributions are calculated annually in the year preceding the equalization year based on the rates to be proposed to the Grand Council.

2. For municipalities with a resource index between 40 and 100 points, a progressively acting equalization is applied. The tariff for the progression must be set in such a way that the equalization rate continuously increases as the resource index decreases.

1. For the determination of special burdens due to settlement structure, area, and topography as well as student ratio, three metrics in terms of load indicators are used.

2. The metric for settlement structure captures on one hand the number of inhabitants per municipality living in dispersed settlements of up to 25, 50, 100, and 200 inhabitants and on the other hand the productive area per inhabitant. These two indicators are given equal weight.

3. The metric for road length captures for each municipality the expenditure categories with standard costs for maintenance and operation per kilometer per year, differentiated by municipal roads, neighborhood roads, and cantonal roads within the municipality. The standard costs per inhabitant are determined for each municipality.

4. The metric for student ratio is measured based on the number of public school students, including junior high school students per inhabitant.

1. The figures relevant for the distribution of GLA funds are converted into index numbers so that the respective index for all municipalities amounts to 100 index points.

2. The sub-indicators are made comparable through standardization. For standardization, index values over 200 points are credited as follows

a) Index values from 200 to 300 points: 75 percent;

b) Index values from 300 to 400 points: 50 percent;

c) Index values from 400 to 500 points: 25 percent;

d) Index values over 500 points: 0 percent.

3. The total index corresponds to the sum of the sub-indices of the three figures.

1. The starting point for determining the compensation contribution is the total index per municipality. The relevant index value is the one that exceeds 300 points. The excess index is weighted by the number of inhabitants. For the distribution of the GLA funds to the municipalities, 10 percent of the resource potential multiplied by the resource index of each municipality is taken into account.

2. ...

1. If a municipal merger results in a substantial loss of GLA funds, the government may grant the new municipality a GLA contribution for a maximum of ten years, provided it is not covered by the one-time support contribution. The annual contribution corresponds to a maximum of the total amount for the municipalities affected by the merger in the year the contribution is assured. This is subject to any potentially higher contribution based on the regular recalculation.

1. A municipality claiming a compensation contribution must submit an application to the cantonal social office by the end of April of the following year at the latest.

2. The municipality must provide evidence of the relevant expenses and revenues as well as the amount of the compensation contribution according to the requirements of the cantonal social office.

3. The application must be accompanied by a corresponding excerpt from the annual financial statements and a declaration of completeness. If the annual financial statements are not available by the end of April, the excerpt and the declaration of completeness must be submitted by a deadline granted by the cantonal social office.

1. The relevant expenditures are based on the actual expenses from support payments and alimony advances of the previous year according to the legal requirements.

2. Claims for reimbursements from the federal government, other cantons, or third parties arising from support payments, alimony advances, and the obligation of relatives to support, as well as from insurance benefits, must be asserted by the municipalities. Revenues related thereto are to be offset against the relevant expenditures.

3. The relevant resource potential corresponds to that which the government determined for the resource equalization of the previous year.

4. If a one-time high social burden equalization arises due to cross-year services and is not settled annually, the relevant resource potential is calculated for the same period during which the services were provided.

1. The net expenditures demonstrated by the requesting municipality, as well as the equalization contribution, are examined by the cantonal social welfare office with regard to eligibility, based on risk considerations. The social welfare office submits the documents containing the municipalities' claims for contributions to the Office for Municipalities no later than the end of June.

2. The government determines the equalization contribution by no later than the end of August.

3. Equalization contributions under 500 francs are not granted.

1. If the cantonal social office discovers that a previous settlement has led to an unjustified higher contribution from the social equalization fund, the difference can be reclaimed from the municipality.

2. A claim for repayment is particularly warranted when incorrect information is discovered retrospectively or when a repayment to the municipality would have significantly affected the relevant settlement period.

3. In the case of unjustified contributions, the cantonal social office shall issue a correction.

1. A municipality may submit an application for an ILA contribution to the office at any time.

2. The application must contain all information and documentation necessary for examination. It must demonstrate in detail the extraordinary and uncontrollable burdens, the lasting disruption of budgetary balance, as well as the exhaustion of reasonable self-help measures.

1. The ILA contribution is generally granted as a one-time contribution. It must be determined in such a way that the municipality is effectively and sustainably relieved.

2. The office reviews the application and conducts the necessary investigations. In particular, it examines the sustainability of the contribution's use.

3. The government decides on a case-by-case basis regarding the granting of the contribution, as well as the duration and level of special financial supervision. Subject to the necessary credit approval by the Grand Council.

1. The government periodically submits a report to the Grand Council on the implementation and effectiveness of the financial equalization. The report demonstrates the impact of the financial equalization instruments.

2. The report provides information on the analyzed period particularly regarding

a) the changes in the distribution of public tasks between the canton and the municipalities and the resulting effects on the municipalities’ room for maneuver and finances;

b) the development of the municipalities’ resources and their burden from fulfilling necessary tasks;

c) the impact of financial equalization on municipal structures;

d) the achievement of the financial equalization objectives, particularly regarding the development of differences in tax burdens;

e) the appropriateness of the assessment bases for determining resource strength and special burdens as well as the adequacy of the funding of the equalization mechanisms;

f) the annual volatility of equalization contributions as well as the approved and rejected applications for ILA contributions;

g) the need for adjustments to the legal bases.

3. The report, along with any proposed measures, may be submitted to the Grand Council separately or within the framework of the budget message or the annual financial statement.