Emergency call from the capitals: municipalities are threatened with financial chaos of 24.8 billion euros!

Emergency call from the capitals: municipalities are threatened with financial chaos of 24.8 billion euros!

The year 2025 will bring unpleasant news for the capitals of the regional states in Germany: the financial situation of the municipalities is deteriorating dramatically. On November 1st, the alarming situation was outlined in a letter to Chancellor Friedrich Merz and all state governments. According to information from Schwerin.news Municipal financial resources must be fundamentally reconsidered, as capital cities are faced with a financing deficit of 24.8 billion euros - an alarming high since 1990.

Why is that? The main drivers of this deficit are rising social spending and growing personnel costs, which place a heavy burden on rural districts, independent cities and municipal associations in particular. These institutions bear around 95 percent of the social burden, which further exacerbates the financial situation. In addition to social benefits, the areas of hospital operations and local public transport also show major financing gaps stuttgart.de emphasized.

Demands of city leaders

In the joint appeal, the city leaders are calling for clear principles for more stable municipal financial resources. This includes:

• Wer bestellt, muss bezahlen: Das bedeutet eine vollständige und angemessene Kompensation in Gesetzentwürfen.
• Wer bestellt hat, ohne zu bezahlen, muss dies nachholen: Hier wird ein kommunaler Anteil an der Umsatzsteuer gefordert.
• Keine Absprachen zulasten Dritter: Bundesgesetze sollten nur verabschiedet werden, wenn die kommunale Finanzierung gesichert ist.

Mayor Rico Badenschier from Schwerin speaks of a growing inability to act in local politics, which also illustrates the loss of trust in democratic structures.

The challenges for municipalities

The difficulties facing cities are not new, but they are becoming increasingly pressing. The gap between municipal income and expenditure is rapidly increasing. In a legal report by Professor Kyrill-Alexander Schwarz, the lack of application of the connectivity principle, which applies at least at state level, is identified as a further reason for the underfinanced situation of municipalities.

The urgent warnings and demands from capitals are not only an internal matter, but also require political solutions at the federal and state levels. It remains to be seen how quickly and comprehensively the response will be, because the well-being of the cities and their residents is at stake. The coming months will be crucial for setting the course for municipal finances in Germany.