1 State - People - Authorities - 17 Municipalities - 172 Finances (GUG)

[1] 1 There exists a municipal aid fund (hereinafter: the fund), intended on one hand to support municipalities in a difficult financial situation, by means of aid referred to hereafter as investment and operational aid, and on the other hand to encourage inter-municipal collaborations and mergers of municipalities, by means of aid referred to hereafter as incentive aid. Reform projects of structures or organizations involving the State or initiated by the State that benefit the municipalities may also receive assistance from the fund.

2. The fund is also utilized within the framework of inter-municipal financial equalization, for the financing of the vertical equalization of resources.

2bis The fund is also utilized for the financing in 2019 of the supplementary allocation to the "resources" component of inter-municipal financial equalization in accordance with the transitional provisions in the modification of December 5, 2017, of the decrees setting the coefficients of direct cantonal tax and direct municipal tax owed by individuals and setting the coefficients of cantonal and municipal tax on the profits and capital of legal entities, dated December 2, 2013.

3. The fund replaces and takes over the compensation fund intended to assist municipalities in a difficult financial situation, created by the law of March 20, 1951.

4. It is managed by the department designated by the Council of State.

[2] The fund is financed

a) by a one-time amount of 8.2 million francs taken in 2020 from the revenues of the inter-cantonal financial equalization;

b) by half of the canton’s share of the additional profit distribution from the Swiss National Bank, after the distribution of the profits for the fiscal year concerned, for the years 2022 and 2023;

c) by any other resources allocated by the Grand Council for this purpose.

1. The Council of State is competent to decide which municipalities may benefit from the fund, either through investment or operating aid, or through incentive aid.

2. It sets the aid and determines its amount and conditions.

3. There is no entitlement to receiving aid.

[3] The Council of State regulates the limit of the fund's annual commitments.

[4] 1. The fund may only grant investment aid for the partial or total coverage of investment expenses.

2. Operating aid may be granted exceptionally, to improve the operating budget.

3. Incentive aid is, in principle, allocated based on the necessity and importance of collaborations or mergers, and takes into account, notably, the tax coefficient and the financial situation of the interested municipalities.

4. The conditions under which the fund intervenes for the vertical equalization of resources are set out by the law on inter-municipal financial equalization.

**1. Any municipality that wishes to receive investment aid must demonstrate that the investment for which it seeks this aid is essential and cannot be covered by its regular resources without resulting in a financial imbalance.**

**2. Only municipalities whose tax coefficient reaches at least the level set by the implementing regulation of this law can benefit from investment aid.**

**3. The fund may provide investment aid in the following two forms:**

a) Interest-free loans or loans at reduced interest rates, primarily for profitable investments;

b) Subsidies, primarily for non-profitable investments.

**4. Both forms of aid may be combined; the Council of State decides in each case.**

1. Operating subsidies are provided only to municipalities that are unable to pass a budget despite having high taxation.

2. Only municipalities whose tax coefficient reaches at least the level set by the implementing regulation of this law can benefit from operating subsidies.

3. Operating subsidies are granted in the form of grants or interest-free loans.

1. Any application for encouragement aid must be submitted jointly by the Municipal Councils of all interested municipalities.

2. All municipalities may be eligible for encouragement aid.

3. The amount of the aid is determined particularly based on the average tax rate coefficient of all the interested municipalities.

4. Encouragement aid is granted in the form of subsidies.

5. The Council of State may set aid ceilings based on the size of the interested municipalities.

If equity requires, the Council of State may set other conditions for the granting of aid.

Other tax revenues of the municipality may be taken into account in weighting the tax coefficient.

[5] 1 During a transitional period extending from 2020 to 2023, municipalities which the reform of the intercommunal financial equalization charge component would place in serious financial difficulties may benefit from extraordinary operational aid.

2. Only municipalities whose tax coefficient reaches at least the level set by the implementing regulation of this law for investment aid can benefit from this extraordinary operational aid.

[6] 1 During a transitional period extending between 2023 and 2024, municipalities whose income tax revenue from individuals for 2023 and 2024 is lower than that of 2022, due to the correction of the cold progression applied on January 1, 2023, and due to insufficient compensation resulting from the evolution of corporate tax revenue for the same periods, may be eligible for extraordinary operational aid.

2. Only municipalities whose tax coefficient reaches at least the weighted average tax coefficient of all municipalities may benefit from this extraordinary operational aid.

The Council of State enacts the implementing regulations of this law.

**The Law Concerning the Creation and Use of the Compensation Fund to Assist Municipalities in Financial Difficulty, of March 20, 1951 [7], is repealed.**

1 The present law is subject to an optional referendum.

2. The Council of State shall ensure, if necessary, its promulgation and execution. It shall set the date of its entry into force.

Law promulgated by the Council of State on January 30, 2002.

The entry into force is immediate.

Transitional provision to the amendment of December 6, 2016 [8]

For the year 2016, the Council of State is exceptionally authorized to withdraw an amount of 1.3 million francs from the aid fund for municipalities to reduce the share owed by the municipalities under Article 29, paragraph 1 of the Public Transport Law (PTL), of October 1, 1996 [9].

Transitional provision to the amendment of March 27, 2019 [10]

For the years 2020 to 2023, the fund is used to finance the temporary allocation distributed among the municipalities in proportion to the population and according to the altitude at which it resides.

Temporary modification of December 5, 2023 [11]

The fund may be used to finance in 2024 the annual allocation in favor of municipalities equivalent to 50% of the contribution received from the Confederation by the canton under the criterion of altitude of geotopographic charges.