The Financing of Walloon Municipalities: A Financing between Externality and Solidarity

Abstract

Belgium is a federal state made up of Regions and Communities. 262 Municipalities are situated in the Walloon Region. The aim of this paper is to describe their funding and to analyze the impact of the last reform of the funding of the Walloon municipalities. This reform is characterized by an increase in the overall amount of the funding and a change in the rules of funding. We analyze the impact of this change on municipalities’ revenue distribution by using a cluster system which allow us to see that some municipalities benefit more than the others from this new funding rules.