No deferral of the "Hessenkasse" for Offenbach

The city of Offenbach will in all probability not receive a deferral of the "Hessenkasse". The Hessian state government had signaled such a possibility to those municipalities that are particularly affected by the declining income from the municipal financial equalization scheme (KFA). For the city, the decline in the KFA means a reduction in income of ten million euros this year. At the same time, it has to transfer three million euros a year to the state as its own contribution to the long-term debt relief program "Hessenkasse".

Although the state was willing to talk until the end, the responsible ministries have yet to reach a decision. It is now clear that an agreement between the Hessian Ministry of the Interior under Prof. Dr. Roman Poseck and the Hessian Ministry of Finance under the leadership of Prof. Dr. Alexander Lorz has obviously not been reached. Both ministries have finally signaled that there will be no possibility of a deferral.

Instead, the regional council has now signaled that the budget submitted by the municipal council with a deficit in the amount of the annual contribution to the "Hessenkasse" can be approved. The deferral of the "Hessenkasse" would have effectively reduced the burden on the budget. However, with the path now proposed by the state to approve the planned budget with a deficit as an exception, the city remains capable of acting. The city councillors can decide on the budget as submitted by the municipal council at their meeting on March 20.

The "Hessenkasse" is a program of the state of Hesse for the assumption of old debts of cities and municipalities. Offenbach has been participating since 2019. For Offenbach alone, the state has taken over 564 million euros in former cash loans with the help of WI-Bank. In return, the city must transfer an annual repayment installment to the state for 30 years, measured by the number of inhabitants. Currently, this own contribution to debt relief amounts to around three million euros per year. At the end of the term, the city will have contributed a total of around 93 million euros to its own debt relief.

A temporary deferral of the "Hessenkasse" would have been a financial relief for the Hessian municipalities in a difficult time, as they would not have had to make any repayments for the time being. This would have given the municipalities more financial leeway in the short term to deal with other urgent expenses. However, the liability would have remained - the repayments would have had to be made at a later date. However, Wiesbaden has now rejected this financial policy instrument.