Berlin Senate Sets Budget Targets for 2026/2027, Aiming for Additional Savings
Introduction
Following the implementation of a three billion euro austerity package for 2025, the coalition government of Berlin is set to embark on another round of budget cuts with the 2026/2027 double budget. According to Finance Senator Stefan Evers (CDU), the Senate has established binding budgets for each individual senate administration, based on a resolution passed on January 30th.
Budget Allocations
The budgets encompass personnel expenses, investments, and so-called consumptive non-capital expenditures. Consumptive expenditures refer to expenses that yield only short-term benefits, in contrast to investments.
The respective departments have until Easter to develop their spending plans for 2026 and 2027 within the allocated budget. The Senate Department of Finance will then review the proposals, taking into account the next tax estimate expected in May. Media reports indicate that various senate administrations have expressed concerns regarding the budgetary targets. However, the Senate resolution was passed unanimously.
Savings Target
Evers estimates that, based on current projections, savings in the range of 500 million euros to less than one billion euros will be necessary. The final amount may vary depending on factors such as the tax estimate. Evers emphasized the ongoing need for significant budget consolidation.
Budget Process and Timeline
Before the summer recess, the Senate intends to finalize its draft for the double budget and submit it to the House of Representatives (Abgeordnetenhaus). The budget will then be deliberated and ultimately approved by the House.
Previous Budget Measures
In December 2024, the House of Representatives, supported by the coalition government, approved a three-billion-euro austerity package for the 2025 budget. The cuts affected nearly all sectors, with two billion euros being eliminated and an additional billion raised through tax increases, withdrawals from state-owned enterprises, and alternative financing models.
Alternative Financing Models
Alternative financing models, such as loans obtained by state-owned companies rather than through the regular state budget due to the debt brake, will continue to be utilized in the coming years.
Emergency Situation
The House of Representatives is expected to declare a state of emergency in the near future, potentially allowing the funding of refugee costs through loans rather than the regular budget.
Impact on Senate Administrations
The budget cuts are anticipated to have a substantial impact on senate administrations. They will be tasked with identifying areas where spending can be reduced while maintaining essential services. The process is expected to be challenging, given the already constrained nature of many budgets.
Opposition Concerns
Opposition parties have expressed concerns about the potential impact of the budget cuts on public services and social programs. They argue that the government should focus on alternative revenue streams rather than relying solely on austerity measures.
Conclusion
The Berlin Senate is facing the difficult task of balancing budgetary constraints with the need to provide adequate public services. The 2026/2027 double budget will be a crucial test of the government’s ability to navigate these challenges and ensure the long-term financial stability of the city.
