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Red alert: municipalities are threatened with financial collapse – Henneke sounds the alarm!
Hans-Günter Henneke warns of a massive financial collapse for municipalities. Current deficits and rising spending are alarming.
Red alert: municipalities are threatened with financial collapse – Henneke sounds the alarm!
The financial situation of municipalities in Germany is alarming. The general manager of the German District Association, Hans-Günter Henneke, urgently warns of an impending collapse of the district budgets. According to a report by the Deutschlandfunks The municipal associations originally expected a deficit of 13.2 billion euros for 2024. However, reality has exceeded the forecasts: after the first three quarters there is a deficit of almost 25 billion euros. Henneke describes the numbers as gigantic and warns that structural errors have led to this negative development.
In order to improve the financial situation, Henneke demands that municipalities should receive a higher share of sales tax. This demand underlines the need to strengthen the municipal revenue base in order to alleviate the ongoing problem of financial overload.
Rising spending and deficits
Additional data shows a worrying picture of municipal finances. In the first half of 2024, expenditure in municipal core and extra budgets increased by 10.8% compared to the same period last year, while revenue only increased by 5.1%. This has led to a financing deficit of 17.3 billion euros for the municipalities and municipal associations, which was 7.3 billion euros in the previous year Statistical offices of the countries reported.
What is particularly striking is that the deficit in the municipalities' core budgets has reached 17.3 billion euros, compared to just 8.2 billion euros in the previous year. While the core budgets are sinking into losses, the extra budgets show a slight surplus of 36 million euros, which, however, has fallen sharply compared to the previous year (0.8 billion euros).
The increasing expenditure primarily affects social benefits, which increased by 12.5% to 41.5 billion euros, strongly influenced by adjustments to the standard rates for social assistance and citizens' benefit. Personnel expenses also rose by 9.1% to 40.5 billion euros. This dynamic in spending, without a corresponding increase in revenue, leads to serious financial difficulties in municipalities.