Mainz is under financial pressure: budget deficit of 134 million euros!

Mainz is under financial pressure: budget deficit of 134 million euros!

The city of Mainz is under financial pressure. Mayor Nino Haase (independent) recently recognized that the city's revenue has fallen, mainly due to the decline in BioNTech's revenue after the pandemic. A deficit of 134 million euros was planned in the budget for 2025, which was objected to by the country's supervisory authority, the ADD. To address the financial difficulties, a new budget plan was passed in June that includes savings to reduce the deficit. However, Haase did not describe the new spending plan as a real austerity program, but rather as a necessary move away from unrealistic plans.

What is particularly striking is that Mainz has achieved a project volume in the investment area that has been able to be realized annually for over a decade. In the past, projects with a total value of over 400 million euros were planned, but these often remained unrealized. Despite these challenges, Haase emphasizes that Mainz is in a good financial position. With equity of almost two billion euros and no debt, the city can be considered one of the financially strongest in municipal financial equalization.

Creative scope and social spending

More realistic planning for investment expenditure should increase the scope for design in the budget. The main problem area, however, is consumer spending, particularly for social security. These have increased by over 200 million euros per year in the last two years. According to estimates, social spending will account for around 490 million euros of the total expenditure of around one billion euros next year. The increase in social spending is attributed to small-scale legislation at the federal level, such as the Federal Participation Act.

In view of the financial burden, Haase is calling for relief from the federal government for municipalities, which provide around three quarters of public services while only receiving a seventh of the overall budget. The implementation of the Federal Participation Act is particularly cost-intensive and places a heavy burden on municipalities, which are also confronted with increasing bureaucracy and new framework agreements. These factors lead to higher costs and increased staffing requirements.

Outlook and further measures

The ADD has now conditionally approved the budget for 2025, which means that Mainz is in provisional budget management. The city council must approve a new budget draft by the end of May 2024. Savings proposals and fee increases are already being prepared, including a possible increase in property tax B to 600 points in order to generate additional income of 20 million euros. Haase also proposes a split property tax between residential and commercial properties in order to further optimize financial resources.

Given the forecast deficits of 147 million euros for 2026, 160 million euros for 2027 and 182 million euros for 2028, the search for solutions is becoming increasingly urgent. Haase admits that Mainz suffers from structural underfinancing of over 200 million euros and that measures must be taken immediately. Due to its high tax revenues in the past, the city may have lost eligibility for new financial aid from the state.