- The Auditing Authority of North Rhine-Westphalia calls for: financial allocation towards auditors
The North Rhine-Westphalian Finance Office issues a warning: Despite being four years into the implementation of the debt control measure, the state's debt has hit an all-time high of 164.4 billion euros, thanks to emergency loans. "This debt is hurting North Rhine-Westphalia financially," warned President of the Finance Office, Brigitte Mandt, upon the release of the annual report.
Uncontrolled spending is leading to a structural underspending in the budget. The repayment costs for the loans taken out between 2020 and 2023 will consume substantial budget funds for several decades in the future, Mandt pointed out. Moreover, revenues from taxes are not increasing at the same pace as in previous years, and they are significantly short of the projected figures. The objective should be to consistently cover expenses with current income.
Normalizing for emergency-related impact, expenditure in 2023 amounted to 95.8 billion euros, an increase of 22.3% compared to 2019. Over 63% of this growth can be attributed to the major expense category of consumptive transfer payments. By the end of 2023, the state had also built up an emergency loan repayment reserve of around 20.8 billion euros.
Per-capita debt only marginally grew
While the per-capita debt still remains very high compared to the majority of other federal states, it only increased slightly by 8 euros to 9,070 euros in 2023 against the previous year. The share of debt in North Rhine-Westphalia's GDP even decreased: from 22% in 2020 to 19.6% in 2023.
As per the 2024 tax forecast, tax revenues are expected to miss the budget target by 1.2 billion euros this year, and by a total of 3.7 billion euros for the years 2025 to 2028.
Therefore, expenditure must be reduced in a sustainable manner. Every task and expense of the state must be scrutinized. Only with a consistently balanced structural budget can room for maneuver be created. Additionally, the auditors found various instances of questionable use of tax funds.
Furthermore, there was a discrepancy of 820,000 euros in the records. The records did not match the budget statement by this amount. However, it was clarified that this was not a deficit, but rather that 194,000 euros of expenses had been underestimated, while 625,000 euros of expenses had been overestimated. In reality, there were 431,000 euros more in the treasury than stated.
Modern Sports Facility Program
NRW.BANK was assigned the administrative management of the 300 million euro Modern Sports Facility 2022 funding program. For this, the state paid the bank around 2.6 million euros in 2021. However, the costs for state-owned personnel amounted to only about 1.6 million euros.
Additionally, the state-owned funding bank did not always carry out its assigned tasks correctly, but rather disregarded the state's guidelines. Grants totaling 6.3 million euros were approved beyond the applied and approved measures, violating the budgetary rights of the parliament.
The Ministry of the Interior of North Rhine-Westphalia proceeded with constructing twelve regional police training centers despite early signs that they would not be fully utilized. The Finance Office had repeatedly suggested a utilization review. The construction of all twelve centers was against the principles of economy and thrift.
Evidence
Only three out of nineteen public prosecutor's offices in the state have a complete understanding of their evidence, as found by the auditors. The acquisition, use, and disposal of evidence could be significantly more cost-effective.
Theater
The costs for the renovation of the Düsseldorf Theater escalated from 6.5 million to 21.5 million euros, more than tripling. The state provided over ten million euros in funding. However, cost estimation and project planning were less than satisfactory. Furthermore, the regional government failed to evaluate the conditions for the grants.
Road Construction
The North Rhine-Westphalia Road Construction Authority did not fulfill the cost, performance, and deadline framework in many road construction projects. The original contract amounts were exceeded in 83% of the approximately 300 examined construction contracts, leading to additional costs of 101 million euros, corresponding to an average increase of around 30%. The performance specifications were often inaccurate and incomplete. The construction deadlines agreed with the construction companies were exceeded in 73% of the examined cases.
The financial sector in North Rhine-Westphalia is closely monitoring the state's fiscal situation. The state's budget is under strain due to high debt levels, with a large portion of it allocated towards loan repayments.
Reducing unnecessary expenditures is a key focus for improving North Rhine-Westphalia's financial situation in the financial sector. This includes scrutinizing every task and expense of the state to ensure a balanced budget.
