Hesse’s Municipalities Struggle Under Rising Debt
Municipalities in the German state of Hesse are facing a growing debt burden due to climbing personnel costs and higher social security contributions. The situation has become so dire that several county administrators have issued a public plea for financial assistance.
"Systems Are Imploding"
Andreas Siebert, County Administrator of Kassel, warns that "the systems are simply imploding." Siebert is among five county administrators who signed a resolution titled "It’s Five Minutes Past Midnight! The Money Is Gone!" and sent it to state and federal authorities. The resolution criticizes the lack of funding and calls for adjustments to the distribution of tax revenues.
Siebert emphasizes that municipalities are at their limit and face drastic austerity measures if they don’t receive additional financial support. "We’ll have to cut back on the few remaining voluntary social services we offer," he says. "That means people will have to go without showers in sports halls and kindergartens will have to close due to a constant shortage of staff."
A Threat to Democracy
Siebert believes that the financial crisis is driving people away from democratic values. "We have to start talking to each other urgently," he urges.
Thorsten Stolz, County Administrator of Main-Kinzig-Kreis, the most populous county in Hesse, supports his colleagues’ plea. He acknowledges the concerns about hospitals, school investments, cuts in municipal finance equalization, and the general austerity measures.
Darmstadt’s Budgetary Woes
Darmstadt, the fourth-largest city in Hesse, is also facing a substantial budget deficit. The recently presented financial plan for 2025/2026 anticipates a shortfall of around 69 million euros. Government allocations, inflation, and other cost increases have pushed the city further away from a balanced budget than ever before.
Other Struggling Municipalities
Offenbach is another city reporting financial difficulties. "Our expenditures exceed our revenues," a spokesperson says. The city is currently relying on reserves but needs to find solutions "at all levels." It attributes the crisis to rising social welfare expenses, particularly for children and youth with disabilities.
Marburg, after implementing a budget freeze until the end of 2024, is facing a deficit of 77.5 million euros in its current financial plan. The city expects to cover the deficit from reserves but recognizes the need to "gradually reduce it" to ensure sustainability.
Frankfurt’s Relative Stability
Frankfurt, Hesse’s largest city, is in a "relatively good" financial position but acknowledges the challenges it faces. The city credits its financial services industry with generating stable tax revenues. However, it notes that rising costs are outpacing tax and fee income.
Frankfurt is prioritizing services and projects, as it can no longer meet all its needs. Education, childcare, and public transportation are experiencing structural underfunding and growing demand.
Government Response
The Hesse Ministry of Finance contends that the financial situation of municipalities has improved over the past ten years due to their own efforts and state assistance. Kassenkredit, a form of short-term borrowing by municipalities, has reached a historic low of under 100 million euros at the end of 2023. Municipal financial assets have also increased steadily, reaching 22.1 billion euros in 2023.
The ministry emphasizes the stability of municipal finances, noting that despite economic challenges, tax revenue projections for municipalities are increasing slightly. The Municipal Finance Equalization Fund is also set to rise to over 7 billion euros in 2025.
Wiesbaden’s Concerns
Wiesbaden disputes the ministry’s assessment, claiming that the gap between revenues and expenditures has been widening for years. The city attributes this to a lack of "connectedness" between government mandates and funding.
"It’s become almost a tradition that the state and federal government enact new mandatory services for municipalities without providing additional financial resources," says the city. It points to the upcoming legal entitlement to after-school care for elementary school children as an example.
Conclusion
Municipalities in Hesse are facing a financial crisis characterized by rising costs and insufficient funding. The situation has prompted county administrators to sound the alarm, and some cities, like Wiesbaden, are questioning the state’s commitment to supporting local governments. The future of essential public services and the well-being of residents are at stake as municipalities struggle to balance their budgets.
