Part I — Situation overview

The Budapest Public Development Council (FKT) held its first meeting since its re-establishment on 1 October 2026. The FKT is a joint coordination and advisory forum of the government and the capital, with five government and five capital members. It is chaired by the Prime Minister and co-chaired by the Mayor of Budapest, and it takes its decisions unanimously. Its re-establishment is provided for by Act LVIII of 2026, adopted by the National Assembly and published in the Hungarian Gazette (Magyar Közlöny) on 1 October. After the meeting, Mayor Gergely Karácsony and Minister for Transport and Investment Dávid Vitézy announced the agreement. The government gives the capital a one-off 120 billion forints, and the capital drops its lawsuits filed over the solidarity contribution. The solidarity contribution is the levy that local governments with a stronger tax base pay to the central budget. The Budapest Transport Centre (BKK) will be owned and financed by the state and the capital half and half. In 2027 this means 170 billion forints each, and the BKK’s remit will also extend to the agglomeration. Parking would in future be organised by the capital, which would use the revenue to set up a road fund, that is, a fund that can be spent only on road renovation. In return, the capital will save 20 billion forints on its operations in 2027, and the finance minister will assign a budget supervisor to it.

The background to the agreement is the capital’s liquidity crisis, about which MIAK wrote on 16 September. At that time it asked for the publicity of the agreement, the valuation of the property settlement and a multi-year formula for the solidarity contribution. It analysed the constitutional background of the solidarity contribution on 7 May. The new conflict has now arisen within the capital. Several inner-district mayors protested on the morning of the meeting: according to 24.hu, the six protesting districts would lose 9 billion forints a year, and the 23 districts together 15 billion. The essence of the objection is that the districts were not involved. The overhaul of parking and the regional BKK require amendments to the law, so the final word lies with the National Assembly. The solidarity contribution remains in place in 2027; its rate will be set by the 2027 budget bill.

MIAK’s reading: the agreement regulates the relationship between the government and the capital, but leaves open the relationships within the capital and around it. The parking money moves from the districts to the capital, without a rule for its distribution. The supervisor is an announced actor, but the supervisor’s mandate is unknown. In the joint BKK two equal owners sit, but it is not known what happens if they disagree. All three questions are the same: the place of the one-off political bargain must now be filled with a predictable rule.

Part II — Foundations in the literature

Three authors provide an interpretive framework for three points of the present agreement. Adam Smith (18th-century Scottish economist and philosopher, founder of classical economics) argues in The Wealth of Nations that expenditure serving the benefit of only one settlement or district should be covered from local revenue. And the toll collected from road users may be spent only on the maintenance of the roads. This yardstick also applies to the road fund: earmarking is good, but distribution must follow where the revenue arises and where the road wears out. According to Governing the Commons by Elinor Ostrom (American political scientist, Nobel memorial prize-winning researcher of the governance of common resources), in durably functioning community institutions those affected by the rules take part in shaping the rules. And those carrying out monitoring are accountable to those they monitor. The exclusion of the districts violates the first principle, and the lack of a mandate for the supervisor the second. Democracy in America by Alexis de Tocqueville (19th-century French political thinker, classic analyst of American democracy) separates the common affairs of local bodies, which concern the whole state, from the affairs that concern only them. In the former the local body is obliged to cooperate, in the latter it is independent. The detailed discussion of the literature — by author, with quotations — can be found in section 6.4 Literature in detail.

Part III — MIAK’s concrete proposal

MIAK proposes three measurable measures. The first concerns the sharing of parking revenue, the second the budget supervisor’s mandate, and the third the governance and financing rules of the regional BKK.

3.1 Formula-based sharing of parking revenue and temporary compensation for the districts (before the bill is submitted)

MIAK proposes that the bill on parking should not be submitted to the National Assembly without three elements. The first is a district-by-district impact assessment. It should include, for every district, the gross parking revenue, the operating cost and the net result for the past three years. For there is still no agreement on the figures. On ATV the Mayor spoke of an average operating cost share of 64 per cent, while the minister, citing the districts’ own statements, spoke of 80–90 per cent. According to the mayor of Ferencváros, half of the revenue there is profit. The second element is a public allocation formula for the road fund. It should lay down in advance in what proportion funds go to the capital’s roads and to the district roads. The basis of allocation should be the length, traffic load and technical condition of the district road network, not individual tenders. The third is a three-year temporary compensation that decreases year by year. It replaces a set share of the districts’ previous net parking result until the allocation of the road fund settles in. The formula must be worked out with the involvement of the districts, in the Association of Budapest Local Governments or at an extraordinary session of the Budapest General Assembly. According to Ostrom’s principle (see 6.4.2), a rule made without those affected does not work in the long run. According to Smith’s argument (see 6.4.1), earmarked fee revenue is fair if it returns to where the road is used. This is the application of the TE2 data-based, public resource allocation programme point and the G28 common resource management programme point to the capital’s two-tier system.

3.2 A written and public mandate for the budget supervisor (at the same time as the assignment)

So far it is known about the supervisor that the supervisor is assigned by the finance minister, is not a budget commissioner, and has no veto. More than this needs to be laid down. MIAK proposes that the supervisor be assigned by a written, public mandate with four elements. The first is the legal basis and scope. The supervisor should monitor the fulfilment of the obligations undertaken in the agreement: the 20-billion saving, the withdrawal of the lawsuits and the joint BKK financing. Not every single financial management decision of the capital. The second is an itemised savings plan. Together with its 2027 budget decree, the capital should publish on which expenditure lines and by what amount it will deliver the 20 billion. According to the Mayor’s promise, this will not happen by reducing the level of public services. The third is a two-way, quarterly public report, addressed at the same time to the finance minister and to the Budapest General Assembly. It should also include the fulfilment of the government’s own commitments: the disbursement of the 120 billion and of the 12-billion public transport per-capita grant. The fourth is a termination condition: the supervisor’s mandate should expire upon fulfilment of the commitments, but at the latest at the end of 2028. Tocqueville’s distinction (see 6.4.3) gives the limit of the mandate here. And Ostrom’s fourth principle gives the requirement that the supervisor be accountable to both parties. This is the application of the G21 expenditure review programme point and the G19 radical transparency programme point.

3.3 Governance and financing rules for the regional BKK (before the launch on 1 January)

The regional BKK is the most durable element of the agreement. According to the minister, from Szentendre to Ráckeve and from Gödöllő to Zsámbék, the BKK will be the commissioning body of every public transport service. The HÉV (suburban railway) also returns to it, and the unified ticketing system will also extend to agglomeration buses. The government and the capital nominate an equal number of members to the new board of directors, and the CEO is elected by the board. MIAK proposes that the company’s founding document and financing contract be public before the launch, and contain the following. The 50-50 per cent financing should be laid down in a multi-year contract of at least three years, with predetermined indexation, not by annual bargaining. There should be a deadlock-resolution rule: if the parity board cannot reach a decision, a procedure laid down in advance should decide, for example the automatic continuation of the previous year’s timetable and budget. The agglomeration settlements should get a right to give an opinion on the timetable. A service minimum should also be laid down: according to the minister, the supply in the outer districts is up to three times as large as in some agglomeration settlements. The order of developments should be based on a public, data-based ranking, and timetable and passenger-count data should be openly accessible. This is the application of the TE4 public service minimum, the KO4 data-based rail development and the KO1 real-time data publicity programme points.

The three proposals are linked by one principle: the bargain between the government and the capital must be translated into a rule that is predictable for the other parties concerned as well. Smith, Ostrom and Tocqueville arrive at the same place from different angles. Revenue of local benefit should return locally, those affected should shape the rule, and the higher level should demand an account only in common affairs.

Part IV — Expected effects and risks

Dimension Expected effect Risk
District budgets The impact assessment and the compensation make the revenue loss predictable; the inner districts can plan The compensation becomes a new burden on the capital and may reduce the amount going into the road fund
Road renovation Formula-based allocation also channels funds to the roads of the outer districts, which until now were left without parking revenue Maintaining the higher-traffic roads of the city centre is more expensive; if the formula does not weight this, their condition may deteriorate
The capital’s financial management Public supervisor reports build trust and also make the government’s commitments enforceable The supervisor’s mandate may gradually extend to the capital’s own affairs, which would erode local government autonomy
Agglomeration transport Unified commissioning and ticketing reduce the supply gap between the outer districts and the agglomeration Parity governance may reach deadlock if the political relationship between the two owners deteriorates
Public finances A multi-year BKK contract makes the annual funding need of 340 billion plannable A fixed ratio is rigid in times of crisis; the contract must include a review clause for extraordinary situations

The most important question to weigh is parking revenue. The districts’ argument is that this money has so far financed services locally. Ferencváros, for example, renovated a social rental building last year from 3 billion forints of parking profit. The capital’s argument is that a unified system is cheaper and that the outer districts also benefit. Both arguments may be true, but this cannot be decided today, because the district-by-district net figures are missing. MIAK therefore does not argue against the reallocation, but asks that the figures and the formula come first. The proposal becomes risky if the compensation becomes permanent. Then the road fund is drained, and the costs of the old system remain together with the bureaucracy of a new one. That is why the compensation must decrease year by year and end after three years.

In the case of the supervisor, the main question is the limit of autonomy. An observer assigned to a local government struggling with financial difficulties can be justified if the central budget provides significant one-off support. It becomes problematic if the mandate is not written down. In that case practice decides the scope, and it always shifts towards the higher level.

Part V — Measurability and summary

5.1 What is worth following? (suggested KPIs)

MIAK proposes the following performance indicators (KPIs — Key Performance Indicators). These are suggested indicators, not government or capital commitments.

  • Publication of the district-by-district parking impact assessment. The suggested target is that, before the parking bill is submitted, the three-year gross and net parking data of all 23 districts be public.
  • Match between the use of the road fund and the formula. In one year it is worth checking how much road renovation was carried out in each district compared with the proportion under the formula. Suggested tolerance: plus or minus 10 per cent.
  • Regularity of the supervisor’s reports and delivery of the 20-billion saving. The suggested target is a quarterly public report in every quarter of 2027, and itemised delivery of the saving without deterioration of public service indicators.
  • The ratio of transport supply in the agglomeration and in the outer districts. According to the minister, the gap today is up to threefold. The suggested target is that in the first two years of the regional BKK this decreases measurably, measured in vehicle-kilometres.

5.2 Summary

MIAK’s request is addressed to the government, the Municipality of Budapest and the National Assembly. The parking bill should go before the National Assembly only with a district-by-district impact assessment, a public road fund formula and a three-year, decreasing compensation. The budget supervisor should receive a written, public mandate, with a scope, a two-way reporting obligation and an expiry date. And the regional BKK should start before 1 January with a public, multi-year financing contract and a deadlock-resolution rule.

Of MIAK’s foundational values, accountability and universal representation are concerned. Accountability, because the agreement binds both parties, and the supervisor strengthens trust only if the supervisor also reports on the government’s commitments. Universal representation, because the agreement also has stakeholders who do not sit at the negotiating table: the residents of the districts and the people living in the agglomeration. Their interests appear in the decision only if the rule is laid down in advance, rather than being the outcome of whatever bargain is struck at the time.

Part VI — Reasoning and further sources

6.1 Press framing by spectrum

In the public affairs and left-liberal band, the agreement and the district protest ran as two separate stories. Telex’s lead article followed the course of the press conference, within the frame of avoiding bankruptcy. In a separate article it gave voice to the protesting mayors, according to whom the Mayor had “become unworthy” of representing the districts. The mayor of Józsefváros announced that she was suspending her participation in the Association of Budapest Local Governments. The mayor of Terézváros held out the prospect of legal steps both at home and at EU level. 444.hu highlighted the lack of transparency of the procedure. According to its information, the participants received the agenda on the morning of the meeting. It also recalled that the Budapest General Assembly had been able to fill only three of the four seats of the capital. HVG provided the history of the solidarity contribution as background: the capital’s burden grew from 5 billion forints in 2017 to 97 billion forints in 2026. The short, breaking-news-style article of 24.hu reported the figures of the districts’ losses. Népszava quoted the head of the Republikon Foundation. According to Gábor Horn, the agreement is largely firefighting, with the exception of the regional BKK. In his view the districts should have been consulted in advance, and the agreement gives no answer to the situation of the other large cities. Index, based on the ATV interview, reported the transport details and the Mayor’s parking figures, highlighting that there is no final legislative decision on parking yet.

In the economic band, Portfolio published two articles. One presented the promulgated act item by item, the other covered the agreement minute by minute, together with the figures of the districts’ losses. In the conservative band, Magyar Nemzet framed the 120 billion as “emergency aid”. It recalled the “parking mafia” theme of the 2019 campaign, and the concern of the mayor of Ferencváros that centralisation evokes the spectre of that old system. Citing the minister’s words, the paper wrote that the 120 billion settles more than 85 per cent of the capital’s claims; Telex and Portfolio reported 80 per cent for the same. No fresh article on the topic was available from Mandiner on this day. On the district protest, every side of the spectrum agreed: Fidesz, opposition and independent district leaders, as well as Momentum, objected to the same thing. This suggests that the dispute is not a party-political one, but a structural question of the two-tier capital.

6.2 Facts and data

Data Value Source
One-off state grant 120 billion forints, in exchange for withdrawing the lawsuits Telex, Portfolio, 444.hu, 1 October 2026
Ratio of the grant to the disputed amount more than 80% (Telex, Portfolio); more than 85% (Magyar Nemzet) — the minister’s statement Telex, Portfolio, Magyar Nemzet, 1 October 2026
The claim previously mentioned by the capital 200 billion forints (Director General’s statement) Portfolio, 1 October 2026
Public transport per-capita grant 12 billion forints, received by the capital Portfolio, Magyar Nemzet, 1 October 2026
BKK funding need above fare revenue in 2027 340 billion forints, half and half: 170 billion each HVG, Portfolio, Magyar Nemzet, 1 October 2026
The capital’s current public transport spending more than 220 billion forints (Mayor’s estimate); the expected relief is around 50 billion Index (ATV Egyenes beszéd), 2 October 2026
The capital’s savings commitment 20 billion forints in 2027, on operating expenditure Telex, Portfolio, 1 October 2026
Solidarity contribution (capital) 5 billion (2017), 89 billion (2025), 97 billion forints (2026, appropriation) HVG, 1 October 2026
Parking revenue loss 9 billion forints in the six protesting districts, 15 billion forints in the 23 districts (the protesters’ statement) 24.hu, Portfolio, 1 October 2026
District examples Józsefváros around 1.5 billion, District I 2 billion forints of loss; Ferencváros 3 billion forints of parking profit (2025) Portfolio, Telex, 1 October 2026
Operating cost as a share of parking revenue 64% on average (Mayor); 80–90% (minister, citing the districts’ own statements); in Ferencváros half of the revenue is profit (mayor) Index, Portfolio, Telex, 1–2 October 2026
Transport supply gap up to threefold supply in the outer districts compared with some agglomeration settlements (minister’s statement) Index, 2 October 2026
Composition of the FKT 10 members (5 government, 5 capital), unanimous decision, with the government and the capital having one vote each Portfolio, 1 October 2026
Legal basis Act LVIII of 2026, promulgated and largely in force from 1 October 2026 Portfolio, 1 October 2026

Two data points require a separate note. One is the ratio of the grant to the disputed amount: for the same ministerial statement, Telex and Portfolio wrote 80 per cent, Magyar Nemzet 85 per cent. MIAK therefore reports both values with their source. The other is the operating cost of parking, for which three different values are circulating. This is not a contradiction, but a sign that the situation varies greatly from district to district. That is precisely why the district-by-district impact assessment under 3.1 is needed.

6.3 Policy dimensions

  • Territorial inequality and rural policy (programme points) — a public, data-based formula for revenue sharing within the capital (programme point ID: TE2) and reducing the gap in transport supply between the capital and the agglomeration (programme point ID: TE4);
  • Transport and infrastructure (programme points) — the development ranking of the regional BKK, the HÉV and agglomeration feeder services (programme point ID: KO4), as well as unified, open timetable and passenger-count data (programme point ID: KO1);
  • Public administration and e-government (programme points) — involving the districts in the decision on the local use of parking revenue (programme point ID: KI9);
  • Economy (programme points) — itemised review of the 20-billion saving (programme point ID: G21), publicity of the supervisor’s reports (programme point ID: G19), regulation of the road fund as a commonly used resource (programme point ID: G28) and ex-post impact assessment of the agreement (programme point ID: G20);
  • Transparency and anti-corruption policy (programme points) — a common data interface for the supervisor’s reports and the use of the road fund (programme point ID: A1).

6.4 Literature in detail

6.4.1 Adam Smith: The Wealth of Nations

In the chapter on the financing of public works, Smith formulates two rules that still hold today. The first is that expenditure serving the benefit of only one settlement or district should be covered from local sources:

“Those local or provincial expenses of which the benefit is local or provincial ought to be defrayed by a local or provincial revenue, and ought to be no burden upon the general revenue of the society.” (own translation)

The second is the earmarking of road tolls. Using the example of English turnpike tolls, Smith warns of what happens if the toll can also be used for other purposes. In that case large revenue can be collected without any part of it going to the purpose for which it was collected. He therefore considers it best to keep road maintenance funded from users’ tolls, but in the hands of local administration. The Budapest road fund touches on both rules. Earmarking — that the parking money can be spent only on road renovation — is exactly Smith’s second rule. The first rule, however, raises a question. The parking fee is paid on the streets of the inner districts, where the burden of road wear and cleaning also arises. If the revenue goes into a common fund, the formula must ensure that the funds return proportionately to where they arose and where the burden is caused. This is what the public allocation formula under 3.1 serves.

📖 Source: Adam Smith: The Wealth of Nations

6.4.2 Elinor Ostrom: Governing the Commons

Ostrom identified eight design principles of durably functioning common-pool resource institutions. The analysis of 16 September applied the principles on the conflict-resolution forum and on multi-level nesting. Two further principles fit the present agreement. The third principle is that of collective rule-making. Those affected by the operational rules mostly take part in modifying the rules. According to Ostrom, such institutions fit local conditions better, because the rules are adjusted by those who also use them in practice. The fourth principle is that of monitoring. The monitors either come from among those affected themselves, or are accountable to them. Applied to the Budapest situation: the rules for overhauling the parking system were made by the government and the capital without the districts. In Ostrom’s framework this endangers the durability of the rule, not only the interests of the districts. And the budget supervisor strengthens the agreement if the supervisor reports not unilaterally to the government but to both parties, and also monitors the government’s commitments. (The work is copyrighted, so the text above is a paraphrase.)

📖 Source: Elinor Ostrom: Governing the Commons — The Evolution of Institutions for Collective Action

6.4.3 Alexis de Tocqueville: Democracy in America

In his analysis of the New England townships, Tocqueville distinguishes two roles of the local body. The township is obliged to fulfil what the interest of the whole community requires: it may not obstruct the state road, and it implements the general rules. In everything else it is independent:

“The townships are only subordinate to the State in those interests which I shall term social, as they are common to all the citizens. They are independent in all that concerns themselves alone.” (own translation)

This distinction provides a yardstick for the present agreement in two places. In the case of the budget supervisor: the government legitimately wants insight into how the capital fulfils the obligations it undertook in exchange for the 120-billion grant, since this is a common affair. The supervisor’s mandate, however, cannot extend to the management of the capital’s own affairs. That is why, under 3.2, the scope must be laid down in writing. In the case of parking, the same question arises between the capital and the districts. The unified fee system and the capital’s road fund may be a common affair, but the maintenance of the districts’ own public spaces and the financing of local services remain the districts’ affair. The formula and the compensation must respect this boundary.

📖 Source: Alexis de Tocqueville: Democracy in America

6.5 International comparison

Joint transport organisation by a capital and its surrounding region is an established solution in Europe. In the German-speaking area the system of transport associations (Verkehrsverbund) operates. In Berlin and Brandenburg the joint transport association is jointly owned by the two states and the Brandenburg districts. In Vienna the association of the eastern region is jointly owned by Vienna, Lower Austria and Burgenland, with a unified fare and unified commissioning. In Paris and its region, Île-de-France Mobilités organises the entire regional public transport, with the participation of the region, the departments and the City of Paris. The common lesson is that multi-owner transport organisers work durably if the financing ratios and the decision-making rules are laid down by a long-term agreement or by law. A dispute between the owners then affects not day-to-day operation but the next cycle of the agreement. The Budapest model is a parity model with two owners. This means a stronger mutual veto than in multi-member associations. That is why the deadlock-resolution rule under 3.3 and the involvement of the agglomeration settlements are of particular importance.

Territorial inequality and rural policy

  • TE2 — Data-based allocation of EU cohesion funds
  • TE4 — Rural public-service minimum

Transport and infrastructure

  • KO1 — Real-time public-transport data
  • KO4 — Rail development with data-based prioritisation

Public administration and e-government

  • KI9 — Local participatory budgeting

Economy

  • G19 — Radical transparency in economic decision-making
  • G20 — Economic policy impact assessment system (Drucker audit)
  • G21 — Systematic review of state expenditure
  • G28 — Framework for common resource management (Ostrom CPR)

Transparency and anti-corruption policy

  • A1 — Public money dashboard

Proposed new programme point: A formula-based rule for two-tier revenue sharing in the capital (parking revenue, road fund, temporary compensation) — for the Territorial inequality and rural policy area.

Proposed new programme point: Governance rules for multi-owner regional transport organisers (multi-year financing, deadlock resolution, agglomeration right to give an opinion) — for the Transport and infrastructure area.

6.7 List of sources

Press sources (MIAK press monitor, 2 October 2026 — topic 1):

Knowledge base references (books):

  • 📖 Adam Smith: The Wealth of Nations
  • 📖 Elinor Ostrom: Governing the Commons — The Evolution of Institutions for Collective Action
  • 📖 Alexis de Tocqueville: Democracy in America

MIAK internal materials:

Supplementary public data sources:

  • Hungarian Gazette (Magyar Közlöny), 1 October 2026 — Act LVIII of 2026 — https://magyarkozlony.hu/
  • Municipality of Budapest — budget decrees and final accounts
  • Hungarian State Treasury — local government budget reports (parking revenues and expenditures by district)
  • KSH (Hungarian Central Statistical Office) — agglomeration commuting data

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