Rostock's financial debacle: deficit of 40.9 million euros - what now?

The city administration of Rostock has presented the citizens with a report on the preliminary financial accounts for 2024. There is a deficit of 40.9 million euros in the city's financial budget after loans amounting to 10 million euros were repaid. The budget originally planned for a loss of 35.3 million euros. This loss represents the worst annual result since 2004.

Finance Senator Dr. Chris von Wrycz Rekowski points out that the nationwide crisis in municipal finances has also reached Rostock. The causes of the negative result include increasing social burdens, high collective bargaining agreements, a stagnating economy and lower tax revenue. Furthermore, the population figures and economic forecasts were revised downwards. While the city's profit-distributing companies are declining, their financial needs are increasing.

City administration measures

In order to meet the challenges, the city administration plans to increase administrative efficiency and optimize costs for personnel, rent, materials and energy. In addition, a fundamental reorganization of municipal finances is called for. A positive aspect in this context is that investments worth 112.8 million euros were implemented in 2024, which represents a new record. These investments exceed the average of previous years and have enabled progress in the renovation and expansion of the city's infrastructure.

In a broader context, a study on municipal finances in North Rhine-Westphalia sheds light on the structural problems that many municipalities face. IW Cologne reports that cost reimbursements and general allocations from the country have the strongest negative impact on debt. In addition, investments and social transfer payments significantly increase debt, while higher tax revenues have a smaller impact.

The study highlights that before the outbreak of the corona pandemic, bottlenecks in municipal budgets had decreased. In order to solve the existing problems, a mix of measures is recommended that also includes higher levels of social welfare payments by the federal or state governments. A proposed investment fund with a volume of 450 billion euros should also help relieve the burden on municipalities.