Municipalities record highest deficit since reunification
08.04.2025 – Around 24.8 billion euros were missing from the budgets of cities and municipalities in 2024. This has now been announced by the Federal Statistical Office. The campaign alliance "For the dignity of our cities" is calling for this issue to finally play a role in the coalition negotiations.
Over the past year, financially weak local authorities have repeatedly warned that social costs are exploding in cities and districts. Now the warnings have been bitterly confirmed. There was a gap of 24.8 billion euros in local authority budgets last year. This sad record was published by the Federal Statistical Office. The figure is almost four times as high as in the previous year and the highest since 1990.
According to the action alliance, the published deficit of 24.8 billion euros is an urgent wake-up call for the federal and state governments. The financial situation of the municipalities is not only strained, but dramatic. Municipal budgets have their backs to the wall.
Offenbach's city treasurer Martin Wilhelm is also sounding the alarm: "The financial imbalance of the municipalities is no longer sustainable. We are taking on more and more tasks without the necessary funds being made available. If the federal and state governments do not finally take countermeasures, we and many cities are threatened with financial collapse."
The figures from the Federal Statistical Office more than underpin the Action Alliance's call for sustainable funding for cities and municipalities and urgently needed debt relief. Those who continue to look the other way run the risk that municipal services of general interest can no longer be secured, according to the Action Alliance. It is therefore urging the federal and state governments to act immediately - before the financial capacity of many municipalities to act is lost for good.
Causes
The Federal Statistical Office has confirmed the arguments of financially weak municipalities: The drivers of the record deficit are social spending, which rose by around twelve percent in 2024 alone. The increases in spending on child and youth welfare (up 17.1 percent) and integration assistance (up 13.6 percent) were particularly sharp.
Claims
Tax revenues, on the other hand, only increased by 1.5 percent. As a result, local authorities have to close the gap by taking out new loans - mind you, because they are taking on tasks from the federal and state governments. This is why "For the dignity of our cities" is demanding concrete steps from the future federal government:
- A higher federal share of the social services that the municipalities fulfill on behalf of the federal government.
- Greater financial participation by local authorities in tax revenues, so that the investment power of local authorities is also strengthened in the long term.
- A ban on the transfer of tasks to local authorities without secure funding.
- The implementation of the long-promised participation of the federal government in a municipal debt solution, which specifically gets financially weak municipalities out of the debt trap.
- A reduction in bureaucracy and digitalization for greater efficiency, especially in the social sector, in the construction industry and with regard to subsidies.
Background information
The action alliance "For the dignity of our cities" brings together 73 municipalities from eight federal states. The members are: Bacharach, Bad Schmiedeberg, Bergkamen, Bischofsheim, Bochum, Bottrop, Castrop-Rauxel, Cottbus, Cuxhaven district, Cuxhaven, Dietzenbach, Dinslaken, Dorsten, Dortmund, Duisburg, Ennepetal, Ennepe-Ruhr district, Essen, Frankenthal, Frankfurt am Main, Geestland, Gelsenkirchen, Ginsheim-Gustavsburg, Gladbeck, Groß-Gerau district, Hagen, Hamm, Hattingen, Herne, Herten, Kaiserslautern, Koblenz, Krefeld, Lahnstein, Leverkusen, Löhne, Ludwigshafen, Lünen, Mainz, Mayen, Mettmann, Moers, Mönchengladbach, Mörfelden-Walldorf, Mülheim an der Ruhr, Neustadt an der Weinstraße, Neuwied, Oberhausen, Obertshausen, Oer-Erkenschwick, Offenbach, Pirmasens, Recklinghausen, Recklinghausen district, Remscheid, Saarbrücken, Salzgitter, Schwerin, Schwerte, Solingen, Trier, Unna district, Unna, Voerde, Völklingen, Waltrop, Werne, Wesel, Witten, Worms, Wülfrath, Wuppertal and Zweibrücken.