Financial crisis and politics: How communities fight for money!

Financial crisis and politics: How communities fight for money!

The black-red coalition is at the center of an intensive debate about the financial challenges of municipalities that are suffering from a deep economic and financial crisis. In a current podcast from Mitteldeutscher Rundfunk, Burkhard Jung, Mayor of Leipzig and President of the German Association of Cities, addresses the tense conditions within the coalition and the direct effects of federal policy on the municipalities. Despite a noticeable effort to bring about change, there has so far been no concrete impact on domestic and economic policy.

Jung is optimistic about possible relief for municipalities, which have been struggling with significant financial problems for years. He emphasizes the need for a debate about the level of social spending. At the same time, the shift to the right in society is discussed, which also influences local politics. A continuing demand is to strengthen municipalities financially and to improve the framework conditions for volunteer work.

Dissatisfaction with the implementation

Despite the agreement on a coalition agreement entitled “Responsibility for Germany”, there is widespread dissatisfaction with the implementation of concrete measures to improve life locally. Many municipalities report problems such as broken sidewalks, missing appointments at the citizens' office and a lack of staff in daycare centers. Although the contract provides for a special fund for infrastructure and climate neutrality amounting to 500 billion euros, the tax distribution in favor of the municipalities was left untouched, even though there is a municipal deficit of over 24 billion euros.

An important component of the coalition agreement is the federal-state-municipal future pact to strengthen the financial ability of municipalities to act. However, there are concerns that certain measures, such as turbo-depreciation on equipment investments, could result in additional costs for municipalities. The announced annual assistance for old debts of 250 million euros only covers around two percent of the funds required for meaningful debt relief.

Further financing measures and challenges

In order to reduce the bureaucratic effort, the funding jungle should be cleared out. A digital platform for applying for funding will be set up to make it easier for municipalities to access funds. Financial support for the accommodation and care of refugees is also guaranteed, but without an increase in the per capita flat rate. Improvements in local public transport, in urban development funding and in the programs for the renovation of schools and sports facilities are also planned.

With regard to the local level, it remains to be seen how this will be included in future legislative processes. Burkhard Jung appeals to the federal government to use the time to deliver tangible results. The next two years will be crucial in noticeably addressing the municipalities’ financial and infrastructural challenges.

For further information on the current topics of the black-red coalition, visit MDR and the Green Bundestag page.