Cash collapse in Saxony-Anhalt: record debt endangers the future!

Cash collapse in Saxony-Anhalt: record debt endangers the future!

In Saxony-Anhalt, the increasing debts of municipalities and districts are causing major worry lines on the foreheads of those responsible. According to an article by MDR The city of Dessau-Roßlau in particular, together with the Anhalt-Bitterfeld district, is heading towards record levels of debt. In order to plug the financial holes, municipalities are forced to take measures such as increasing dog taxes and adjusting cemetery fees. The drastic step of closing home parlors is also being considered.

But what is driving local authorities into this predicament? The answer is as simple as it is worrying: the economy is weak while collective wages and the cost of living continue to rise. This imbalance leads to an increasing deficit. Anhalt-Bitterfeld, for example, is struggling with an unprofitable maternity clinic, while Dessau-Roßlau is recording high losses in its clinic, amounting to around 60 million euros. It almost reminds you of a vicious circle that you can't break.

Financial support and frantic austerity measures

In order to alleviate the financial hardship somewhat, the state government has formulated some support measures. However, these often only help the municipalities with the largest debts and ignore the budgetary discipline of the more frugal cities. According to the Association of Cities and Municipalities, financial equalization in Saxony-Anhalt is in crisis because there are still no serious reforms in sight. Many budget plans are based on new debt that is simply unsustainable. Bad Schmiedeberg is sitting on debts of 20 million euros, in Wittenberg it is even over 50 million euros. Wittenberg faces particular challenges, where financing for a planned state horticultural show remains uncertain.

Another problem is the budget blocks, which are often ignored. Many cities and municipalities are unable to get their spending under control. The country has apparently made the most indebted municipalities a priority and is granting them extensive financial aid. However, this means that the “more frugal” municipalities and their budgetary discipline are not sufficiently recognized.

Taxes and sources of income

On the revenue side, the numbers show mixed results. In the first quarter of 2025, the municipalities of Saxony-Anhalt generated 302.2 million euros from trade tax, which corresponds to an increase of 5.7 million euros or 1.9 percent compared to the previous year Statistics Saxony-Anhalt reported. However, the situation in Dessau-Roßlau is anything but rosy, as the city bucked the trend and recorded a decline of 2.6 million euros in trade tax revenue. In comparison, Dessau-Roßlau performed the worst with income of only 4.5 million euros.

The income generated shows that large cities such as Magdeburg and Halle (Saale) are in a much better position. Magdeburg can look forward to an increase of 9.4 million euros and is at the top of the country's trade tax revenue with 39.7 million euros.

The challenges are therefore clear: municipalities must find creative solutions to get their financial problems under control while at the same time withstanding the pressure from the state government and the population. The time is ripe for a change and new ideas. However, what exactly can be done remains to be seen.