German Association of Towns and Municipalities criticizes draft budget

Saxony's municipalities are demanding more money from the state. "We are calling for a reallocation of finances between the federal, state and local governments, a short-term increase in investment allocations in the draft state budget by the state and the elimination of the structural deficits of social service providers," explained Bert Wendsche, President of the Saxon Association of Towns and Municipalities (SSG).

Association does not want to support financial equalization law

Wendsche was critical of the government's draft for the 2025/2026 double budget and the Financial Equalization Act (FAG). The SSG no longer wants to support the latter.

The government and the municipal associations had already concluded an agreement on the most important allocations from the state to the municipalities in the summer of 2024. "These have been cut again without our consent as a result of the October tax estimate. Further agreements have not been kept."

SSG President speaks of the largest deficit in decades

Wendsche put the budget deficit in the municipal coffers at 682 million euros at the end of 2024. This is the largest deficit in decades. The drastic reduction in investment allocations to local authorities would foreseeably lead to a widespread construction freeze in cities and municipalities. Funds for road construction and fire protection are also declining. In the case of school building construction and daycare centers, only projects that have already been started are de facto being financed.

Finance Minister Christian Piwarz (CDU) sounded optimistic when the FAG was presented to the state parliament. "We are not leaving our municipalities alone. We are securing their financial ability to act, we are creating planning security and we are taking the current challenges seriously," he said. At the same time, he called for a clear correction on the part of the federal government. "It has a duty here. It cannot be that it defines the tasks but passes the costs on to the municipalities."