- The fiscal predicament in Dresden continues to be 'exceptionally tight'.
Dresden, being the main city, is anticipating a deficit of roughly 45 million euros for this year, as reported in their mid-year financial report released on Wednesday. The report implies that the city's financial condition remains critically tight during the second half of 2024.
This is a first in years for the main city to anticipate wrapping up the year in the red. The financial strain is attributed to escalating costs due to inflation, a substantial surge in spending within the social and asylum sectors, which hasn't been adequately supported financially by the federal government or the Free State of Saxony. Alongside this, there's a significant burden of personnel costs following the recent wage agreement in the public sector.
Revenue sources, like taxes, allocations, and fees, are projected to swell to around 200 million euros more than initial predictions. However, this boost is counteracted by the anticipated increase in expenditures amounting to around 264 million euros. Considering the liquidity generated last year, a shortfall of nearly 45 million euros is expected to occur.
No sign of Immediate Resolution
The report does not indicate any prospects of relief in the immediate future. Looking towards the 2025/2026 budget and the long-term financial plan until 2029, it is apparent that social expenditure will continue to skyrocket while main allocations will experience a drastic decrease.
Mayor Dirk Hilbert proposed a shift in the city's financial strategy. He pointed out that essential allocations from the Free State are significantly declining, while statutory obligations, particularly in the social sector, are escalating exponentially. He emphasized that maintaining the current situation would be unfeasible.
Despite Dresden's efforts to increase revenue, the anticipated increase in expenditures is projected to outweigh it, leading to a potential deficit. This financial predicament in Dresden might persist, as the report suggests a continuation of rising social expenditure and decreasing main allocations in the future.
