Three out of four counties are in a dramatic financial situation
The President of the German Association of Counties laments the precarious financial situation of many counties and warns of cuts, for example for sports clubs and museums. The situation is too serious, the SPD warns, and hopes for a cross-party solution to the old debt problem.
The German counties are facing a major financial problem, according to their umbrella organization. "The financial situation is worsening significantly, as 219 of the 294 counties in Germany were in deficit last year and could not achieve a balanced budget," said Reinhard Sager, president of the German Association of Counties, to "Die Welt am Sonntag".
The outlook is also bleak. In 2024 and in the coming years, most counties will have to continue to draw on reserves and take out loans, the newspaper reported, citing calculations by the Association of Counties. Counties are "continuously given new tasks," and the number of regulations is increasing. "We are drowning in bureaucracy," Sager complained. He therefore called for "adequate funding, specifically: the federal and state governments must give us the money we need to fulfill our tasks." Because as tasks grow, so do costs.
If the financial situation does not change, there will be further cuts in voluntary spending. Subsidies for sports clubs, museums, libraries, or music schools could be reduced or abolished, Sager warned. "I believe that would be fatal given the tense mood in the country."
Union opposes constitutional amendment for debt relief
Anke Rehlinger, deputy chair of the SPD, told the Funke media group that a solution to the old debt problem is "urgently needed so that the affected municipalities can invest instead of just managing scarcity." The SPD's executive board will therefore decide on Monday to adopt a resolution and demand financial relief for heavily indebted municipalities in this legislative period.
"We expect the willingness to talk and find solutions from all federal states and all democratic factions in the German Bundestag," the resolution states. The challenge is too great, the situation of many municipalities too serious, "to play political games on their backs."
In spring 2022, the Federal Ministry of Finance presented a proposal for one-time debt relief for affected municipalities, with the federal government reportedly ready to bear half the costs. However, a constitutional amendment is required to include future municipal debt in the debt brake anchored in the Basic Law. This would require a two-thirds majority in the Bundestag and Bundesrat. According to reports in the Funke newspapers, the CDU and CSU are opposed to this.
The German government needs to consider a constitutional amendment to include future municipal debt in the debt brake, as suggested by the Federal Ministry of Finance, to provide one-time debt relief for affected municipalities. Without this amendment, further cuts in voluntary spending, such as subsidies for sports clubs and museums, could potentially occur, as warned by Reinhard Sager, president of the German Association of Counties.
