1 Foundations and Organization, Public Charges » 15 Districts and Municipalities » 153 Financial Budget (FHG-BG)

1. Subject Matter

This Act governs the management of finances, expenditures and their approval, as well as accounting.

2. Scope of Application

1 This Act applies to

a) the municipalities;

b) the municipal institutions;

c) the intermunicipal associations.

Deviating provisions in the legal bases of the institutions or in the statutes of the intermunicipal associations remain reserved.

2 The provisions concerning the municipalities apply mutatis mutandis to the districts and their institutions.

3 This Act is not applicable to private law legal entities in which a municipality participates or which perform public tasks.

3. Principles of Budget Management

Budget management is governed by the principles of legality, economy, efficiency, budget balance, user-pays financing, benefit compensation, and proper accounting.

4. Presentation

1 The accounts in the financial plan and annual report are structured by tasks (functional

classification) and within these, according to the chart of accounts of the harmonised

accounting model.

2 The following levels of detail are used

a) In the ordinary presentation, accounts are summarised by main accounts.

b) In the detailed presentation, the specific sub-accounts are shown.

3 The Government Council issues regulations on the minimum content and presentation.

**II. Control**

1. Controlling and Internal Control System

1 The municipalities manage government activities through appropriate controlling. This includes goal setting, planning of measures, implementation of measures, and review of government actions.

2 Controlling extends in particular to

a) finances;

b) participations in institutions governed by public and private law;

c) the management of risks affecting the municipality;

d) the preservation of assets.

3 An internal control system (ICS) must be maintained, which includes regulatory, organizational, and technical measures.

2. Budgetary Balance

1 The overall result of the income statements shall be balanced in the medium term.

2 A balance sheet deficit must be offset within five years.

3. Financial Plan

1 The financial plan, to be prepared annually, serves to plan and control finances.

2 The financial plan covers the budget year and the three subsequent years. It specifically includes

a) the key financial and economic policy figures;

b) the development of financial key figures;

c) the commentary on financial development;

d) the budget;

e) the planned expenditure and revenue for the subsequent years.

3 The municipal assembly determines the budget. It takes note of the other parts of the financial plan.

4. Budget

a) Principles

1 A budget must be prepared for each calendar year, comprising the income statement and the investment statement.

2 The principles of annuality, specification, completeness, comparability, and gross presentation apply.

3 The tax rate is determined by the medium-term equalization in the sense of § 6 para. 1.

b) Structure

1 The budget must be structured according to the ordinary and detailed presentation within the meaning of § 4 para. 2.

2 The budget for institutions with separate accounts must be appended, provided it is approved by the voters.

c) Appropriation Credit

1 A single appropriation credit comprises the total expenditure of a main account and corresponds to the sum of the associated detailed accounts.

2 An appropriation credit authorizes the annual financial statements to be charged in the appropriation year for the designated purpose up to the approved amount.

3 Unclaimed credits expire.

d) Deadline

1 The budget for a calendar year must be approved by mid-December of the preceding calendar year.

2 If no approved budget is available at the beginning of the calendar year, only expenses essential for administrative activities may be incurred. The last legally binding tax rate shall apply.

e) Supplementary Appropriations

1 If an appropriation credit is missing for an expenditure or is insufficient, a

supplementary appropriation must be obtained.

2 A supplementary appropriation must be obtained before entering into new commitments. If

the postponement of an expenditure would result in significant disadvantages, the Municipal Council

may order that the supplementary appropriation be utilized prematurely.

3 The procedure for the budget is decisive.

f) Budget Overruns Without Supplementary Credit

1 A supplementary credit is not required for budget overruns for

a) mandatory expenditures that are bound by a legal provision of the federal government, the canton,

the district, or the municipality;

b) the financial implications of a court decision;

c) emergency expenditures for averting danger or for urgent damage repair;

d) expenditures that are offset by specific additional revenues of at least the same amount for the same purpose in the same fiscal year;

e) expenditures for which an expenditure authorization from the voters is available.

2 The budget overrun must be approved by the Municipal Council.

5. Annual Report

1 The Municipal Council reports to the Municipal Assembly on the development of the

finances of the past year. The report shall contain in particular

a) the analysis of financial key figures;

b) the commentary on the financial situation and significant risks;

c) the annual financial statements;

d) the status and statements of expenditure authorizations.

2 The annual financial statements and the statements of expenditure authorizations shall be

submitted to the Municipal Assembly for approval. It shall take note of the other parts of the

annual report.

6. Investment of Financial Assets

1 Financial assets not required for payment needs must be invested securely.

Attention must be paid to adequate diversification and a market-compliant return

is to be sought.

2 The Government Council issues investment regulations.

III. Expenditures

1. Concept

An expenditure is understood as the use of financial assets for the fulfillment of public

tasks.

2. Prerequisites

Every expenditure requires a legal basis, an appropriations credit, and an expenditure authorization.

3. Appropriation of Expenditure

**a) Content**

1 The appropriation of expenditure authorizes the incurring of financial commit-

ments for specific projects up to a certain amount.

2 It must be obtained before entering into commitments.

3 An appropriation of expenditure, stated at the gross amount, must be submitted

to the decision-making body as a material transaction and justified in a report

that specifies third-party contributions, financing, and subsequent costs.

b) Exceptions to the Requirement for Expenditure Authorization

Expenditure authorization is not required

a) for expenditures that are legally mandated by federal, cantonal, district, or

municipal law, and for which there is no significant discretion regarding their

specific use;

b) for the procurement of necessary human resources and material means for

administrative activities, with the exception of buildings and facilities;

c) for one-time new expenditures that do not exceed 1.5% of the tax revenue from the

simple tax according to the last completed annual accounts, but at least up to CHF 75,000;

d) for recurring new expenditures that do not exceed 0.5% of the tax revenue from the

simple tax according to the last completed annual accounts, but at least up to CHF 25,000.

c) Increase in Expenditure Approval

1 If the approved amount is insufficient for the realization of the project, an application

for an increase in expenditure approval must be made before incurring further

obligations.

2 An increase in expenditure approval is not required for additional expenditures

due to inflation. These must be declared in the financial statement.

4. Expenditure Execution

a) Decision on Use of Funds

The decision on the use of funds governs the specific application of the funds

that may be claimed within the framework of expenditure authorizations and budget credits.

b) Settlement of the Expenditure Authorization

1 Expenditure authorizations must be settled after the completion of the project.

2 The settlement is subject to the same auditing and approval procedures as the annual financial statements.

c) Payment Instruction

1 A payment instruction is required for making the payment or offset.

2 Every payment requires a voucher. The payment instruction must be noted on the voucher.

IV. Accounting

1. General

a) Purpose

The accounting aims to provide a true and fair view of the financial situation, which corresponds to the actual asset, financial, and earnings position.

b) Principles

Proper accounting follows the principles of clarity, materiality, reliability, compara-

bility, going concern, gross presentation, and accrual basis.

c) Applicable Standards

1 Financial reporting is governed by the harmonized accounting model.

2 The Government Council designates the applicable professional recommendations and any deviations therefrom. It may issue further provisions regarding financial reporting.

2. Annual Financial Statements

a) Contents

1 The financial year is the calendar year.

2 The annual financial statements consist of

a) the balance sheet;

b) the income statement;

c) the investment statement;

d) the cash flow statement;

e) the notes.

3 The financial statements of independent institutions must be enclosed.

b) Balance Sheet

1 The balance sheet contains assets on the asset side and liabilities and equity on the liability side.

2 Assets are divided into financial assets and administrative assets. Administrative assets comprise those assets that directly serve the performance of public tasks.

3 Special-purpose funds and special funds are allocated to equity or debt capital according to their character.

c) Income Statement

1 The income statement contains the expenses and revenues of a financial year.

2 The income statement is structured into

a) the operating result;

b) the financial result;

c) the extraordinary result.

3 The operating result and the financial result together constitute the ordinary result. This is credited or debited to the balance sheet surplus or deficit together with the extraordinary result.

d) Investment Calculation

1 Investment calculation compares investment expenditures with investment revenues.

2 Investment expenditures create assets that can be used for several years and serve administrative purposes.

e) Extraordinary Statement

1 Expenses and income, as well as investment expenditures and investment income, are

considered extraordinary if they could not have been anticipated in any way

and are beyond influence and control.

2 Additional depreciation according to § 37 is also considered extraordinary.

f) Cash Flow Statement

1 The cash flow statement provides information about the sources and uses of

financial resources.

2 It is divided into operating, investing, and financing activities.

g) Notes

The notes to the annual financial statements comprise

a) the designation of the accounting framework applied for the financial reporting

with any deviations;

b) the accounting policies, including the significant principles of recognition

and measurement;

c) the statement of changes in equity;

d) the statement of investments and guarantees;

e) the statement of fixed assets;

f) the disclosure of special funds;

g) additional information that is relevant for assessing the assets, financial and

earnings position of the municipality.

3. Balance Sheet and Valuation

a) Principles of Accounting

1 Assets are recognized if

a) they will generate future economic benefits or their use is intended for

the fulfillment of public tasks, and

b) their value can be reliably determined.

2 Liabilities are recognized if

a) their origin lies in a past event;

b) an outflow of resources for their fulfillment is certain or probable, and

c) their amount can be reliably determined.

3 The Government Council limits the formation of provisions.

b) Valuation Principles

1 Financial assets are reported at fair value.

2 Administrative assets are valued at acquisition cost less depreciation.

3 Liabilities are recognized in the balance sheet at their nominal value.

c) Depreciation and Impairment

1 Assets of the administrative assets that are subject to a loss in value through use

are depreciated on a straight-line basis over their estimated useful life.

2 An asset accounting system must be maintained. The Government Council determines the asset

categories and the depreciation rates.

3 If a permanent impairment is foreseeable for an item of administrative assets,

its carrying amount shall be adjusted.

d) Additional Depreciation

1 Additional depreciation may be made if

a) the financial and economic situation allows; and

b) an appropriation credit exists for this purpose.

2 The appropriation credit must be resolved at the same time as the tax rate as

a) a supplementary credit for the current financial year, or

b) expenditure in the budget for the coming year.

4. Internal Charges

1 Internal charges are credits and debits between individual accounting

segments.

2 They are to be made when they are necessary for more precise invoicing to

third parties and special funds, for ensuring economical task fulfillment, or for

the comparability of accounts.

V. Special Types of Financing

1. Special Types of Financing

a) Special Financing

1 Special financing refers to earmarked funds for the fulfillment of a specific

public task. Its establishment requires a legal basis.

2 Contributions from the general municipal budget are permissible

a) to avoid excessive service charges, or

b) as repayable advances, if the earmarked revenues temporarily do not cover

expenditures.

3 Obligations and advances of special financing are subject to interest.

b) Special Funds

1 Special funds are assets endowed by third parties with specific conditions or as legacies and unincorporated foundations.

2 The expenditures and revenues are booked outside the profit and loss statement and the investment statement.

3 No subsidies or withdrawals are made between the special funds and the general budget of the municipality.

c) Special Accounts

1 Special accounts are maintained for independent institutions and special-purpose

associations.

2 Regarding expenditures, budget, and accounts

a) of the institutions, decisions are made by the eligible voters, unless the legal

bases of the institutions contain differing provisions;

b) of the special-purpose associations, decisions are made by the delegates'

assemblies, unless the statutes contain differing provisions.

3 Profit distributions to the municipal budget are permitted, provided that this does

not result in excessive service fees or restrict self-financing according to

commercial principles.

VI. Performance-Oriented Public Management

1. General

1 If the administration or individual parts thereof are subjected to the principles of

results-oriented public management (ROPM), the provisions of this Title shall take

precedence over other financial regulations.

2 The Government Council may establish further regulations deviating from the general

provisions, particularly with regard to

a) the procedure for introducing ROPM;

b) the structure of the financial plan and annual report;

c) the subdivision of the administration into administrative units;

d) the approval of appropriation credits;

e) the issuance of service mandates;

f) the obligation to obtain supplementary appropriations;

g) the delegation of competencies of the Municipal Council;

h) accounting and reporting.

3 The electorate shall decide on the introduction and implementation of results-oriented

public management. The decision requires approval by the Government Council.

2. Budget

a) General

1 The budget for the income statement is structured according to administrative units and contains for each such unit a budget appropriation as well as a corresponding performance mandate.

2 The budget for the investment statement can be structured according to administrative units or functionally according to HRM.

b) Budget Appropriation

1 The budget appropriations of the income statement are decided as a balance between expenditure and revenue (global budget).

2 The budget appropriation of the investment statement comprises investment expenditures. Investment revenues are shown separately.

c) Performance Mandate

1 The performance mandate defines the goals and services of an administrative unit for a performance period.

2 It contains at least the following elements

a) Impact goals, which are updated over several years;

b) Performance goals for the period of the performance mandate;

c) Indicators for measuring the impact and performance goals;

d) Standards, which determine the desired manifestation of the indicators.

3 The municipal assembly approves or decides on the performance mandate.

d) Supplementary Appropriation

1 If a global budget or an appropriation credit for investment accounts is insufficient, a supplementary appropriation must be obtained.

2 Supplementary appropriations for global budgets are only permissible if compensation is impossible or would lead to significant disadvantages.

3 In addition to the cases mentioned in § 13, global budget overruns resulting from revenue shortfalls do not require a supplementary appropriation.

3. Reporting

In the reporting pursuant to Section 14, the fulfillment of the performance mandates must be demonstrated.

VII. Fees

1. General

a) Object of the Levy

1 Fees are levied by the districts and municipalities, within the scope of their autonomy, for

a) Official acts of the administration of the districts and municipalities (administrative fees);

b) The use of public property or facilities (usage fees);

c) The granting of concessions (concession fees).

2 These provisions apply unless federal law, international treaties, or special decrees of the Canton as well as the districts and municipalities provide otherwise.

b) Obligation to Pay Fees

1 An obligation to pay fees arises for anyone who initiates or causes an official act, or

who uses a public asset or facility.

2 If several persons are liable to pay fees, they are jointly and severally liable.

2. Fee Assessment

a) Cost Recovery Principle

1 Fees shall be assessed in such a way that the total revenue does not exceed the total costs of the

relevant branch of administration.

2 Deviating from this, in the case of usage and concession fees which are cost-

independent, the total revenue may exceed the total costs.

b) Principle of Equivalence

When assessing fees, particular consideration is given to the effort involved in the official act, the importance of the matter, and the benefit for the fee-paying person.

c) Principle of Equality

1 Fees must be assessed in accordance with the principle of equality before the law.

2 For persons who reside outside the district or municipality, higher fees may be charged

a) Concession fees that are cost-independent;

b) Usage fees, if the use by external persons results in higher costs or if the public asset or facility is co-financed by general tax revenues.

d) Fee Schedules

1 The District Council or Municipal Council shall issue the fee schedules, subject to

Art. 12 para. 1 lit. b of the Law on the Organisation of Municipalities and Districts

of October 25, 2017 (Municipal Organisation Law, MOL).

2 A flat fee may be set, a fee range with a minimum and maximum rate may be

issued, or the assessment may be based on time spent or other criteria.

3 If an official act causes a particularly high or particularly low effort and there is an

obvious disproportion to the flat fee or to the maximum or minimum rate, or if a

fee otherwise appears obviously excessive or too low taking into account the cost

recovery and equivalence principles, the corresponding fee amount may be exceeded

or undercut.

4 For the use of premises by political, cultural, sports or charitable organizations for

their non-commercial activities, the fees may be reduced or waived entirely.

e) Determination within the Fee Framework

1 The fee must be determined within the applicable fee framework, unless a lump sum has been fixed and no assessment based on time spent or other criteria is provided for.

2 The specific circumstances must be taken into account, in particular

a) the amount of work involved;

b) the importance of the matter;

c) the duration of use of a public thing or facility;

d) the benefit to the fee-paying person.

f) Disbursements

1 Disbursements are costs incurred in official acts or in the use of public

facilities or services, namely

a) Costs for fact-finding, evidence collection, and procurement of documents;

b) Remuneration for experts, appointees, witnesses, and informants;

c) Postage, telephone, and other transmission costs;

d) Costs for publications;

e) Travel and transport costs.

2 Disbursements shall be reimbursed by the fee-obligated person.

3 Minor disbursements are included in the fees and are not billed separately.

VIII. Competencies

1. Electors

1 Electors shall decide by ballot on

a) the granting and increase of expenditure authorisations;

b) the acquisition and disposal of real estate, with the exception of minor

transactions;

c) the introduction of results-oriented public management.

2 The municipal assembly shall decide on

a) the approval of the budget, supplementary appropriations and the tax rate,

and shall take note of the remaining parts of the financial plan;

b) the approval of the annual accounts;

c) the approval of accounts for expenditure authorisations.

3 The financial plan and annual report in the ordinary format within the meaning

of § 4 para. 2 shall be sent and published with the invitation to the municipal

assembly. Anyone may inspect the detailed format.

2. Municipal Council

1 The Municipal Council exercises oversight over the financial household and is, in particular, responsible for

a) submitting the budget, supplementary appropriations, expenditure authorizations, and their increases, as well as the annual accounts;

b) approving credit overruns and the premature utilization of supplementary appropriations;

c) proposing the determination of the tax rate;

d) submitting the financial plan;

e) managing and disposing of third-party contributions within the framework of the conditions;

f) managing assets and changing the purpose of administrative assets, provided that no structural measures are involved;

g) taking out loans to finance approved expenditures;

h) investing funds;

i) resolutions regarding the use of budget appropriations or expenditure authorizations, unless they are reserved for the organs of institutions or commissions;

j) organizing the accounting system and regulating the authority to incur obligations and to dispose of funds.

2 The tasks according to para. 1 letters e to i may be delegated to subordinate bodies.

3. Audit Committee

a) Duties and Powers

1 The Audit Committee examines the financial management of the municipality and its institutions.

2 It scrutinizes the budgeting and accounting and the financial reporting from a formal, legal, and material perspective, and verifies the existence of the ICS.

3 It has access at all times to the documents necessary for the audit and can obtain the required information. It may engage experts for the audit.

b) Reporting

1 The Financial Audit Commission reports

a) to the Municipal Council in detail on the audit result;

b) to the voters in summarized form on the audit result

and submits a motion regarding the budget, supplementary appropriations, expenditure

authorizations and their increases, as well as the annual financial statements.

2 It must previously hear the Treasurer regarding the intended reports

and motions.

3 Reports and motions to the municipal assembly must be sent

and published with the invitation.

IX. Transitional and Final Provisions

1. Transitional Provisions

a) Period of Validity

1 The Financial Budget Act for the Districts and Municipalities of January 27,

1994, remains applicable for

a) the execution of the budget for the last financial year prior to the entry into force of

the present Act;

b) the application for and approval of the corresponding annual financial statements;

c) the execution of commitment credits approved under previous law.

2 The budget for the first financial year after the entry into force of this Act

shall be adopted in accordance with this Act.

b) Opening Balance Sheet

1 An opening balance sheet, accompanied by a corresponding report, must be prepared as of the effective date of this Act.

2 The opening balance sheet must be adopted by the Municipal Council and audited by the Audit Committee.

3 The audit report and resolution are subject to approval by the Government Council.

c) Valuation

1 Financial assets shall be revalued as of the effective date of this Act in accordance with § 35.

2 Administrative assets shall be recorded in the investment balance sheet as of the effective date of this Act at their residual book value and depreciated over their remaining useful life.

3 Valuation differences of financial assets and administrative assets shall be capitalized as a revaluation reserve or an appreciation reserve, respectively, within equity.

2. Repeal of Existing Law

Subject to § 52 para. 1, the Financial Household Law for Districts and Municipalities of January 27, 1994 is repealed upon the entry into force of this Act.

3. Amendment to Existing Law

The Act on Financial Equalization of February 7, 2001, shall be amended as

follows

Section 14 para. 1

1 The Canton shall annually pay a non-earmarked contribution to those municipalities

as a standard expenditure equalization, where the standard expenditure exceeds

the standard revenue in the income statement and which corresponds to the

difference between standard expenditure and standard revenue.

Section 15 para. 1

1 The standard expenditure shall be determined according to standard expenditure

groups of the income statement and suitable causation criteria and generally corresponds

to the weighted average values of all municipalities.

Section 17 para. 1

1 The standard revenue of individual municipalities comprises the cantonal contributions,

contributions for or from tax capacity equalization, the share of the revenue from real

estate gains tax, extraordinary revenues, and the standard revenue from taxes in the

income statement.

4. Referendum, Enforcement, Entry into Force

1 This Act is subject to a referendum in accordance with Sections 34 or 35 of the Cantonal Constitution.

2 It shall be published in the Official Gazette and, after its entry into force, shall be included in the Collection of Laws.

3 The Government Council is entrusted with the enforcement. It shall determine the date of entry into force.

1 LG 25-42 with amendments of October 22, 2025 (LG 27-80).

2 Main heading newly inserted on October 22, 2025, former main headings VII. and VIII. become main headings VIII. and IX.

3 Newly inserted on October 22, 2025.

4 Newly inserted on October 22, 2025.

5 Newly inserted on October 22, 2025.

6 Newly inserted on October 22, 2025.

7 Newly inserted on October 22, 2025.

8 Newly inserted on October 22, 2025.

9 SRSZ 152.100.

10 Newly inserted on October 22, 2025.

11 Newly inserted on October 22, 2025.

12 Main heading as amended on October 22, 2025.

13 Main heading as amended on October 22, 2025.

14 LG 18-501.

15 SRSZ 153.100.

16 SRSZ 154.100.

17 January 1, 2021 (Off. Gaz. 2021 164); amendments of October 22, 2025 entered into force on March 1, 2026 (Off. Gaz. RE-SZ18-0000000030).