- Financial Minister Taubert reduces expenditures in the current year.
Thuringian Ministries Need to Cut Spending by an Additional 70 Million Euros this Year Due to lower tax revenues and increased expenditures in certain areas, Finance Minister Heike Taubert (SPD) is demanding stricter budget controls. The ministries are required to reduce their spending by 0.5% and create what's known as a 'budget reserve'. A ministry spokesperson confirmed this in response to a query in Erfurt. Also, no financial commitments are to be made for the upcoming year in certain funding programs, with exceptions needing the finance ministry's approval.
The current budget has a value of approximately 13.5 billion euros, with a deficit of 156 million euros, which the ministries must also offset through reduced spending.
2025 Budget with Limited Spending Increases
Taubert discussed the budget situation with the cabinet, according to the state chancellery in Erfurt. Due to the slowing economic growth, lower tax revenues are predicted for this year, although the exact amount is yet to be determined. The May tax forecast had anticipated lower revenues of 112 million euros for Thuringia compared to expectations. The following tax forecast will be released in November.
Furthermore, Taubert announced that the 2025 state budget draft will be prepared based on this year's budget. This means that there will be few or no higher spending levels than 13.5 billion euros, in contrast to the specialists' department's wishes. The budget draft still requires cabinet approval. It should be presented to the state parliament as soon as possible after its constituent session at the end of September.
Decision by the Fresh Thuringian State Parliament
The ministries had earlier requested an additional 2.2 billion euros in spending for the following year and remained unphased by this. "The state's financial capacity has significantly narrowed, particularly as a result of excessive spending growth in recent years. Therefore, we need to re-evaluate and focus once again on our core tasks," Taubert justified her decision to limit this year's spending volume.
Ultimately, it will be the newly-elected members of the Thuringian state parliament who will decide on the 2025 budget. If it is not approved by the beginning of 2025, there will be provisional budget management. This implies that all legally required payments will be made, but no new investments or projects can commence.
The financial sector may be impacted by Thuringia's strict budget controls due to reduced spending, as stated by Finance Minister Heike Taubert. The financial sector might need to adjust its investment strategies in light of the reduced government spending and potential aversion to risk.
The financial sector could play a crucial role in helping Thuringia offset its budget deficit, as it provides various financing options for businesses and municipalities affected by the spending cuts. Banks and financial institutions might offer lower interest rates or more flexible repayment terms to support the region's economic recovery.
