Hesse is struggling with a 7 billion euro deficit: What counts now!

Hesse is struggling with a 7 billion euro deficit: What counts now!

Hesse reported an annual deficit of around seven billion euros in its 2024 annual report. This alarming balance results from sharply declining tax revenues and rising personnel costs, which describes the country's budget situation as extremely tense. Finance Minister Alexander Lorz (CDU) is therefore calling for comprehensive financial consolidation and targeted investments, especially in education and security. The minister emphasizes that in recent years significant funds have flowed into new positions for schools, universities, the police and the judiciary.

In order to respond to dwindling financial opportunities, digitalization should be used more intensively and existing processes should be made more efficient. The 2024 annual report provides detailed documentation of the country's assets, earnings and financial position according to commercial criteria. The Süddeutsche Zeitung points out that Hesse is an exception in Germany, as the state produces its own annual report that provides a complete overview of the financial situation.

Financial transparency reforms

A central aspect of Hessian budget management is commercial accounting, known as Doppik, which was introduced on July 14, 1998. This reform was introduced with the aim of enabling a transparent presentation of the country's asset, financial and earnings situation. The first opening balance sheet was prepared on January 1, 2009, and since then, continuous documentation has been ensured with the consolidated financial statements as of December 31, 2023. The consolidated financial statements, which were confirmed by an independent auditing firm, have received an unqualified certificate from the appointed auditors since 2013.

The switch to a performance-based double budget in 2023, which also includes a consolidated financial statement as an appendix, increases the efficiency of budget management. There are also international perspectives for these reforms. The EU Commission is working on the introduction of a uniform double accounting system for the public sectors of the EU member states, known as the “European Public Sector Accounting Standards” (EPSAS). These developments position Hesse as a pioneer in public budget management not only nationally but also internationally. The website of the Hessian Ministry of Finance offers comprehensive information on this.