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City Council warns: Billion dollar deficit threatens municipal future!
Cities are demanding quick help from the federal government against the threat of billions in deficits by 2025. Financial crisis requires urgent reforms.
City Council warns: Billion dollar deficit threatens municipal future!
The financial situation of German cities, municipalities and districts has worsened dramatically. In an urgent appeal, the German Association of Cities, an association of around 3,200 cities and municipalities, is calling on the new federal government to take quick measures to cushion the precarious situation. The cities are expecting a deficit of over 13 billion euros for 2025 and a similar figure for the following years, which will further exacerbate the municipal financial crisis. According to the People's voice The President of the Association of Cities, Markus Lewe (CDU), expressed the urgency that the federal government must deliver concrete results by 2025.
The municipalities already had a deficit of almost 25 billion euros last year. In this financial situation, cities are forced to cut sensible voluntary spending, even though they are legally obliged to fulfill many tasks. This problem is described as a structural crisis that is fundamentally different from past financial crises. Another factor that is exacerbating the situation is the ongoing weak growth, which is causing local authorities' income to fall drastically.
demands of the cities
Against this background, the Association of Cities is calling for an increase in the share of community taxes, especially in sales tax revenue. These structural changes are necessary to solve the old debt problem and avoid a further increase in new debt. The main committee of the German Association of Cities has also made it clear that the shifting of debts into municipal budgets is clearly rejected. Only a reform of the debt brake that creates additional scope for investments in infrastructure and education could be of benefit to municipalities. However, easing the debt brake should not reduce the pressure for consolidation and reform, he demands City Day.
Markus Lewe emphasized that the cities are not prepared to take on additional tasks that are not fully funded. In the event of any tax relief, it must also be ensured that local authorities' loss of income is unambiguously compensated for. In order to cope with the advancing crisis, it is essential that municipalities are given greater freedom in planning law and when awarding contracts. The hope is that financial pressure in cities can be reduced by reducing bureaucracy and speeding up procedures.
In view of these challenging financial prospects, the election of Burkhard Jung (SPD) as President of the German Association of Cities is to be expected. Jung, who served as president from 2019 to 2021 and is currently vice president, could strengthen the voice of communities during these critical times. The demands from cities and communities are clear: immediate and substantial support is needed from the federal government to avert a fundamental crisis in the welfare state at local, federal and state levels.