Conflict over finances defused: agreement on key points

The dispute over municipal finances in Saxony has been settled for the time being. As the Ministry of Finance announced on Friday, the state and the leading municipal associations have agreed on key points for the municipal financial equalization for the years 2025 and 2026. "I am very pleased that all participants in the negotiations have not allowed themselves to be infected by the public pressure of the past few days - this proves their ability to act despite many an election campaign manoeuvre," explained Finance Minister Hartmut Vorjohann (CDU). He was convinced that it would be possible to "find a good solution to the current challenges in parallel with the preparation of the 2025/26 double budget".

For the next two years, the districts and independent cities are to receive a total of 162.5 million euros each, primarily to support social spending. The rural districts will receive 125 million euros and the independent cities 37.5 million euros per year. The municipalities belonging to the districts are to receive a lump sum investment allowance totaling 82 million euros from the municipal financial equalization for the years 2025 and 2026.

Henry Graichen, President of the Saxon Association of Districts, sees the current result as merely a bridging aid in view of the growing deficits in the budgets of the districts. "What is needed in a further step is permanent structural financial relief at district level for the constantly rising social costs. We urgently expect the new state parliament and the new state government to tackle securing the financial stability of the municipal level as a central task."

The President of the Saxon Association of Towns and Municipalities, Bert Wendsche, also hit the euphoria brake: "After difficult negotiations, we have a result that will enable the municipalities to draw up budgets for the years 2025/26, but will still lead to deficits in many places. There is no scope for new social charges or standard increases. The municipalities are at their financial limits." For a sustainable solution, the following must apply consistently: "Give priority to the economy and value creation and stop bureaucracy and new standard increases."

The municipal umbrella organizations had previously repeatedly made it clear that without a significant improvement in financial allocations, the high cost increases for cities and municipalities over the next two years would no longer be manageable. CDU district councillor Graichen had put the deficits of the districts for this period at a total of 833 million euros.