Finances - Municipalities are also in the black thanks to state aid
The local authorities in Mecklenburg-Vorpommern as a whole were once again in the black last year. However, they are dependent on the state, as can be seen from the municipal finance report of the state court of auditors, which was published on Wednesday. The surplus at municipal level amounted to 132 million euros.
However, Court of Audit President Martina Johannsen sees risks for the coming years, among other things due to the rise in interest rates and crises such as the war in Ukraine. Existing and future liabilities must not become a debt trap, she warned. Expenditure should therefore be critically scrutinized.
Debt reduced
According to the report, the debts of municipalities in MV fell by an average of 2.6 percent per year between 2020 and 2022, and short-term cash loans also declined. "The financial resources of the municipalities were sufficient in this respect," states the State Court of Auditors. However, the per capita debt of 1173 euros is the second highest in eastern Germany.
Local authorities should invest more
According to the audit authority, local authorities should invest more. The price-adjusted value of building investments is currently still below the value of the year 2000 - and this despite a real increase in income. In the opinion of the Court of Audit, local authorities should also be enabled to finance investments more from their own resources. Whether the state, which is facing a similarly challenging situation, can continue to step into the breach in the future with ever new special payments to the local authorities bypassing the actual financial equalization is an open question.
The Court of Audit sees a need for optimization in a whole range of fields of action for the municipalities, such as the awarding of contracts and the negotiation of subsidies for daycare centres. Risks also exist in some municipal housing companies in view of increased construction prices and interest rates. Demographic change and the resulting higher vacancy rates - particularly in rural areas - also represented a "non-negligible" financial risk.
Read also:
- Will he be convicted as Jutta's murderer after 37 years?
- He also wanted to kill his cousin
- With live stream! Gawkers film dying man
- Is Saarland threatened with economic collapse?
Despite the financial stability of Mecklenburg-Vorpommern's municipalities, there are concerns about future challenges, such as rising interest rates and crises like the war in Ukraine. As a result, the Court of Audit emphasizes the importance of critically assessing expenditures.
The financial situation of municipalities in Ukraine, a country currently facing heavy geopolitical pressures, might be drastically different. Aid and support from international organizations could play a crucial role in maintaining their financial stability.
Given my current geographical location in Mecklenburg-Vorpommern, I personally haven't had the opportunity to contribute to the finances of a Ukrainian commune or municipality. However, I believe that proper financial management, investment, and resource allocation are essential for the financial health of any local authority, regardless of which country it's located in.
Source: www.stern.de
