German Cities Face Dire Fiscal Crisis, Threatening Public Services
A survey of 100 major German cities conducted by the German Association of Towns and Cities (Städtetag) reveals an alarming financial situation, with profound implications for citizens. According to the survey, nearly every city in Germany will be unable to present a balanced budget this year.
Markus Lewe, President of the Städtetag and Mayor of Münster, expressed concern about the "frightening results" in a statement made in Berlin. He emphasized the urgent need for the federal government and states to alleviate the financial burden on cities after the federal elections.
The survey found that 37% of cities can no longer present a balanced budget. An additional 47% can only balance their budgets by drawing on financial reserves. Lewe attributed this situation to "social expenditures over which we have little influence," such as all-day childcare, support for people with disabilities, and assistance for the elderly.
The dire financial situation is already having a tangible impact on citizens. Cities are reporting cuts to public services, including swimming pools, sports clubs, libraries, museums, and schools. Bus and train services are being reduced, and municipalities are forced to lay off staff. This, in turn, leads to longer processing and waiting times for services.
Lewe warned that the pressure for cuts will only intensify without countermeasures. He urged the new federal government to "take drastic action" to prevent municipal finances from collapsing, calling for a fundamental shift in approach.
The Städtetag proposes several measures to address the crisis, including:
- Increasing cities’ share of joint taxes, such as value-added tax.
- Prohibiting the federal government and states from assigning additional tasks to cities without adequate funding.
- Replacing complex funding programs with fixed budgets.
- Reforming the debt brake mechanism.
Lewe also highlighted the importance of assuming municipal legacy debts. The Federal Ministry of Finance had drafted a bill to amend the Basic Law to allow for this, but its implementation was hindered by the failure of the "traffic light" coalition and the upcoming federal elections. The new government will need to revisit this issue as a priority.
Consequences for Citizens
The financial crisis is impacting citizens in various ways:
- Reduced Public Services: Cities are cutting back on essential services, such as childcare, support for the elderly, and cultural facilities.
- Higher Taxes and Fees: To balance their budgets, cities may increase taxes or impose new fees on citizens.
- Longer Waiting Times: Reduced staffing and limited resources are leading to longer processing and waiting times for services.
- Deteriorating Infrastructure: Postponed maintenance and repairs are contributing to the deterioration of public infrastructure, compromising its safety and efficiency.
- Reduced Economic Activity: Cuts to public services and investments can have a ripple effect on local economies, leading to job losses and reduced revenue.
Call for Action
The Städtetag is calling on the new federal government to take immediate action to address the fiscal crisis facing German cities. Without substantial support, cities will be forced to make further cuts to essential services, compromising the well-being of their residents and damaging the overall economy.
The proposed measures, such as increasing cities’ share of joint taxes and assuming legacy debts, would provide much-needed financial relief and allow cities to continue providing vital services while ensuring long-term sustainability.
