For years, municipalities in Germany were able to demonstrate a financing surplus. Now there is a deficit at the end of the year for the first time since 2011. How did this development come about?
Last year, municipalities in Germany recorded a financing deficit of 6.8 billion euros for the first time since 2011. Revenues of 358.1 billion euros were offset by expenses of 364.9 billion euros in 2023, as the Federal Statistical Office in Wiesbaden announced.
In the years from 2012 to 2022, there were always financial surpluses through our own tax revenues and allocations from the federal and state governments. The allocations were also temporarily increased during the Corona pandemic to support municipalities. In 2022 the surplus amounted to 2.6 billion euros.
The result is made up of municipal core and extra budgets: “The deficit in the core budgets amounted to 6.2 billion euros in 2023, after a surplus of 2.2 billion euros in the previous year,” explained the statisticians. The extra budgets therefore recorded a deficit of 0.7 billion euros in 2023. In the previous year there was a surplus of 0.5 billion euros.
Municipal spending rose sharply
According to the information, municipal spending rose sharply by twelve percent (39.2 billion euros) within a year. Social spending in particular is one reason for this – it rose by 11.7 percent to 76 billion euros.
Among other things, the standard rates for citizens’ benefit and social assistance were increased on January 1, 2023. The fact that war refugees from Ukraine can receive citizen’s money also contributed to the increase – although in return the expenditure under the Asylum Seekers’ Benefits Act was 7.9 percent lower than in the previous year.
In addition to spending on social benefits, other important types of spending also grew strongly: In the core budgets, personnel spending rose by 7.4 percent to 80.9 billion euros, which is primarily due to the 2023 collective agreement in the public sector.
Also high income – but not high enough
There was also a significant increase of nine percent on the income side, 29.7 billion euros more than in the previous year – “but this could not compensate for the increase on the expenditure side,” explained the statisticians. Tax revenue rose by 7.3 percent to 130.3 billion euros. Trade tax revenue in particular increased more than expected.
“While trade tax revenue (net) in Rhineland-Palatinate fell by 26.9 percent compared to the particularly high revenue in the previous year, it rose by an average of 9.5 percent in the other states,” it said. The decline in Rhineland-Palatinate is due to the headquarters and location of the vaccine manufacturer Biontech.
The basis of the data is the quarterly cash statistics for the municipalities and municipal associations excluding the city states.
Source: Stern
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