Municipalities in need: 215 billion euros are missing for infrastructure!

Municipalities in need: 215 billion euros are missing for infrastructure!

The financial situation of German municipalities is alarming. According to a recent report by the Deutschlandfunk Municipalities in Germany are missing over 215 billion euros this year in order to be able to carry out urgently needed infrastructure renovations. This sum has increased by almost 30 billion euros compared to the previous year, which corresponds to an increase of around 16 percent. The planned spending on infrastructure, however, only amounts to 48 billion euros.

The renovation projects cover essential areas such as streets, schools, administrative buildings, sports halls and swimming pools. The overwhelming majority of this data comes from a survey of treasure chambers carried out by KfW. In this context, the President of the German Association of Cities, the Mayor of Leipzig, Burkhard Jung, expressed the urgency of a quick and uncomplicated provision of federal funds for the affected municipalities. He also warned that the subsidies should not be allowed to trickle down into the budgets of the federal states.

Effects of the Corona crisis

The financial situation of the municipalities is also heavily burdened by the consequences of the Corona crisis. Again KfW Report shows that the mood in the communities has worsened. Budget surpluses from recent years are no longer achievable due to falling income and rising expenses. This leads to expected austerity measures, which in turn could jeopardize necessary investments.

The level of investment was already assessed as inadequate in 2019. According to nationwide projections, the investment backlog has increased to 147 billion euros. This has negative effects on the local infrastructure, competitiveness and the quality of life in Germany. Municipalities will continue to be confronted with enormous investment needs and challenges in the future.

Support measures

In view of the crisis, an economic stimulus package was passed on June 3rd that is intended to support municipalities with their investments. The KfW municipal panel survey provides valuable data and is considered an important reference in the economic policy debate in Germany. It remains to be hoped that the planned support will be implemented in a timely and effective manner in order to overcome the pressing infrastructure problems in cities and municipalities.