Despite savings, the 2024 budget closes with a large deficit
04.08.2025
The City of Offenbach closed the 2024 financial year better than expected, but still with a significant deficit. After several years of surpluses, this is the first negative result since 2017. Due to enormous price increases and new statutory payment obligations, among other things, the planning for 2024 had already assumed a high deficit. "Local authorities across Germany are in a real financial crisis. This is also clear from the 2024 annual financial statements for Offenbach," explains City Treasurer Martin Wilhelm.
City Treasurer Martin WilhelmThe good news is that the deficit has been significantly reduced by 34.4 million euros. The savings made by the municipal authorities and the release of provisions contributed significantly to this.
He adds: "As a result, however, the 2024 financial year will still end with a deficit of 13.2 million euros, which will have to be covered by the reserves from previous years."
Wilhelm is not only concerned that the ordinary reserves, which could be built up thanks to the positive results of the past seven years, are decreasing. The depletion of the liquidity reserve is also problematic: because the city is not allowed to take out long-term liquidity loans for its current expenditure, it is fundamentally dependent on the highest possible reserve of uncommitted, i.e. freely available funds (liquidity reserve). Thanks to the better annual result for 2024, the reserve has shrunk by €6.8 million less than expected. "Within one year, the liquidity reserve has nevertheless decreased by 33.4 million euros to 86.8 million euros and thus by around 28 percent - a problem that more and more municipalities are facing and which can only be compensated for by higher income if expenditure continues to rise."
This deficit trend will continue for the foreseeable future, warns the city treasurer. Planning for 2025 and the coming years also foresees higher expenses than income. After it became clear a good year ago that the financial situation would deteriorate alarmingly once again, the city council responded immediately with savings, some of which have already had an impact on the 2024 budget result. City Treasurer Wilhelm: "Thanks to these savings measures and the still high reserves, we are currently still able to bridge the financially difficult situation. However, the options for saving are finite and the reserves will probably be used up by 2029. By then at the latest, the city's income must have increased significantly - for example through taxes or through higher income from the municipal financial equalization scheme, which at least partially refinances the city's statutory duties. This growing underfunding, which is affecting more and more local authorities, therefore presents us with enormous challenges. For this reason, the tough austerity measures must remain in place, which will be felt by all departments and companies in the municipal group - and therefore unfortunately also by the citizens of our city."
Savings
The savings made during the year included cuts of 25 percent in almost all budgets, the abandonment of projects that were actually planned and the stipulation that no new administrative positions will be created until 2028 that are not refinanced through their work or third-party funding. "It is absolutely clear that we will first try everything we can to further reduce expenditure and receive more funding from the municipal financial equalization scheme. However, the problem is that high price increases, rising social expenditure and additional new compulsory expenditure such as all-day care at elementary school are placing an ever greater burden on the budget. In order to get any prospect of budget approval at all, we have already had to plan for a property tax increase of 300 points for 2027. Otherwise, the municipal financial supervisory authority would no longer grant us budget approval - then the city would effectively no longer be able to act because it would no longer be allowed to provide voluntary services, such as for clubs, or make new investments, for example in schools and daycare centers. This must be prevented at all costs," emphasizes city treasurer Wilhelm.
The problem is exacerbated by the dependence on the economic situation and the large fluctuations in trade tax, which is one of the city's largest sources of income. "It is extremely good and important that so many new companies have decided to settle in Offenbach. This is a great success of our economic development under Lord Mayor Dr. Felix Schwenke. These companies bring jobs and, in future, additional income from trade tax. Offenbach urgently needs this in order to become more financially crisis-proof. However, we still have a deep valley to cross before things start looking up again."
Restrictive employment policy and higher interest income
One of the factors contributing to the improvement in the annual result for 2024 was a restrictive staffing policy through reappointment and promotion freezes - as a result of this and unfilled positions, almost six million euros less was spent during the year. In addition, 3.2 million euros in material costs and 1.7 million euros in allocations and grants were saved. Higher interest income and loans that were postponed to a later date improved the result by a further 11.5 million euros. The reversal of provisions improved the result by 17.5 million euros. Furthermore, the share of income tax rose by five million euros and allocations and grants to the city, including via the municipal financial equalization scheme, increased by a total of 7.7 million euros. In total, the city received 208.1 million euros from municipal financial equalization (after 218.8 million euros in the previous year) - this is still the largest source of income for the city. By comparison, income from trade tax amounted to only 85.4 million euros at the end of the year - after the record result of 122.4 million euros in the previous year.
High investment in education
The city invested a total of 75.3 million euros in the 2024 financial year. Despite the tense financial situation, the city councillors have agreed that education will remain the main focus for 2024: New construction, renovation and expansion of schools and daycare centers as well as the renovation of the Rosenhöhe forest swimming pool, measures at sports facilities and flood protection on the Main are among the largest areas in which the city invested in 2024.
Budget closing 2024
The 2024 budget closes with income of 636.8 million euros and expenses of 650.0 million euros. The ordinary result is therefore in deficit at minus 13.2 million euros (planned: -47.5 million euros). Due to a plus in the extraordinary result (2.9 million euros instead of the planned 0.1 million euros), the overall result for the year amounted to minus 10.3 million euros (planned: -47.5 million euros).