Hesse's municipalities: Record KFA 2025, but disappointment remains!

Hesse's municipalities: Record KFA 2025, but disappointment remains!

In Hesse there is a lot of excitement about the finances of the municipalities! For 2025, the Ministry of Finance announced a record amount of 7.13 billion euros from the municipal financial equalization (KFA). But despite this impressive sum, the municipal associations are anything but enthusiastic. According to the ministry, this is an increase of almost 200 million euros, which sounds positive given the country's tight budget situation. But the reality is different The time reported.

There is great disappointment because the originally planned allocations of 7.47 billion euros were drastically reduced to 7.13 billion euros. Gert-Uwe Mende, the President of the Hessian Association of Cities, was critical: “There is no reason to celebrate.” Municipal spending is increasing due to growing tasks in areas such as social affairs, youth, education and transport. Many cities are faced with massive budget problems and can barely cover their expenses.

The financial situation of the municipalities

The situation is further exacerbated by the poor economic situation in Germany. Hesse must expect tax losses of around 900 million euros in 2024 and 2025, in addition to possible further reductions in revenue. These circumstances make it almost impossible for municipalities to balance their budgets. David Rauber, managing director of the Hessian Association of Cities and Municipalities, emphasizes that the municipalities will have already slipped into the red in 2023. Rising social spending and high inflation are putting additional strain on the coffers.

The communities in Hesse rely on the KFA to fulfill their tasks. This compensation is intended to compensate for differences between wealthy and poorer communities. The state supports the 442 municipalities in Hesse not only through the KFA, but also with investment, support and debt relief programs. In total, around 4.6 billion euros will flow to Hessian municipalities outside of the KFA in 2024, according to the Ministry of Finance.

A look into the future

The question remains how municipalities will deal with the financial challenges. The increasing expenditure is disproportionate to the state's allocations, which could further worsen the situation for many cities. The hope of an improvement in the financial situation seems to be a long way off. How The time reports, the local level is required to prepare for a difficult future in which financial scope could be further limited.

Developments in municipal financial equalization will continue to be closely monitored because they are crucial for the financial health of Hessian municipalities. The coming months will show whether municipalities are able to face the challenges and keep their budgets stable.