Municipalities: Budget deficit exceeds one billion for the first time

According to the Saxon Association of Towns and Municipalities (SSG), Saxony's towns and municipalities have a budget deficit of more than one billion euros for the first time. The municipal budgets are in a state of emergency, the SSG announced.

According to the information, the deficit in the independent cities amounted to around 520 million euros as of 30 September, 225 million euros in the municipalities and 270 million euros in the districts. Administrative activities, which had generated surpluses for decades, are now also in deficit (just under -400 million euros).

Expenditure is rising by leaps and bounds

While tax revenue is no longer growing after adjustment for inflation, expenditure is continuing to rise by leaps and bounds, according to the SSG. For example, trade tax in the third quarter of 2024 fell year-on-year for the first time in four years. At the same time, personnel payments grew by 7.6 percent and social benefits by almost 17 percent.

"It can't go on like this!" said SSG President Bert Wendsche according to the press release. He called for "decisive steps", such as abandoning the parental contribution-free pre-school year and the daycare moratorium. The Saxon state parliament decided on a moratorium for daycare centers at the end of September. It provides for daycare staff to be kept at the current level even if the number of children falls in order to improve the quality of care.

With a view to the upcoming collective bargaining for the public sector in the coming year, Managing Director Mischa Woitscheck added that the extremely exceptional financial situation of local authorities must be taken into account in the collective bargaining agreement.