Financial Matters - Schleswig-Holstein: The anticipated tax revenue may be reduced.
Schleswig-Holstein's financial difficulties are set to worsen due to a recent tax evaluation. Although the state is still expected to receive approximately 15 billion euros by 2028, the projected growth will be less than initially anticipated. In the period between 2024 and 2028, there will be 1.1 billion euros less than anticipated in October, according to Finance Minister Monika Heinold (Greens). "The outcome of the tax assessment highlights the tight financial situation in Schleswig-Holstein and the necessity for an emergency loan and budget consolidation."
For the third time in a row, a tax assessment has lowered the expected state revenue projections, states Heinold. "The trends suggest that the overall financial stability of the state is extremely strained." She is resolute, however, against budgetary freeze measures. Over the summer, Schwarz-Greens had imposed a freeze on the budget, which was temporarily lifted after a vote from a spending committee.
For 2024, expectations are that tax revenue will drop by around 175 million euros compared to the forecast in October, standing at 12.82 billion euros. For 2025, the anticipated tax revenues amount to 284 million euros less than previously estimated, equating to 13.373 billion euros. The potential state debt surges by 543 million euros from 2024 to 2028.
The projected revenue shortfalls for the subsequent years are 254 million euros (2026), 194 million euros (2027), and 198 million euros (2028). However, this shortfall is counterbalanced by the 204 million euros previously planned for tax law changes within the state's financial planning.
The state parliament has allocated three emergency loans amounting to 1.5 billion euros to cover the current budget requirements. Heinold assures that there will be no alterations in the spending guidelines for 2024 due to the uncertain state debt.
"The spending framework for 2025 is 550 million euros," said the Minister. The black-green coalition intends to save 200 million euros in the budget. The remaining 350 million euros could stem from an intervention in the social security fund, global shortfalls, or another emergency loan. The cabinet will discuss the draft budget for 2025 in September during a retreat.
Heinold expresses relief over the latest tax development, asserting, "We're on target for 2024." Despite the expected tax increase of 470 million euros in 2024, a surplus of 500 million euros has already been generated between January and April. "This is just a tentative calculation." Finalization of the budget balance for the preceding year is anticipated before the summer break.
Opposition criticism
FDP finance politician Annabell Krämer argues that the Schwarz-Greens faction needs to handle the remaining high tax revenues more efficiently and prioritize their spending. "The state government has created a vast financial cushion for 2024 with the notary loans, with which it can seemingly make up for the lower than forecast tax revenues of 175 million euros with little exertion." This is not sound budget policy, she contends, to make up for reduced tax revenues with questionable emergency loans.
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Monika Heinold, the Finance Minister of Schleswig-Holstein, mentioned the necessity of an emergency loan due to the tight financial situation revealed by the recent tax assessment. The anticipated tax revenue for 2024 is expected to drop by around 175 million euros compared to the October forecast, affecting the state's finances. Heinold is against budgetary freeze measures and aims to save 200 million euros in the budget for 2025, partially through interventions in the social security fund or emergency loans.
Source: www.stern.de
