Pressure on budget consolidation

One of the main reasons for the drastic fall in key allocations is the trade tax revenue in Wiesbaden and Frankfurt taken into account for the calculation period, which has risen proportionally less than in Offenbach. This is due to the fact that Offenbach contributed a low amount to the calculation system in the previous calculation period, even by Offenbach's standards. In addition, in contrast to the development in the other two major cities, Offenbach has exceptionally recorded a more significant increase in trade tax revenue in the current calculation period. "We are expecting around 80 million euros for 2021 as a whole. However, this particularly good result cannot be planned for in the long term, but is largely due to one-off effects at individual companies, which we will unfortunately no longer have next year," explained City Treasurer Wilhelm.

In the calculation period for the KFA funds, which will be paid out in 2022, tax revenues are around 34 million euros higher than in the previous calculation period for the KFA funds, which were paid out in 2021. In the KFA system, the grants will therefore fall by 15.5 million euros next year to an estimated 190 million euros. "The fact that we can no longer count on over 80 million euros in trade tax in 2022 and at the same time the funds from the KFA are decreasing is tearing a new big hole in our planning, especially as the expenses for mandatory tasks continue to increase from year to year," says Wilhelm. It is true that the higher trade tax income this year compared to the budget (a total increase of around 10 million euros compared to the budget) will flow into the reserves. "This increases our liquidity, which is good. Overall, however, these reserves alone are not enough to achieve balanced budgets in the medium term by 2024/25. But we have to do this in order for the municipal financial supervisory authority to approve our medium-term budget planning."

The fact that Offenbach cannot simply compensate for the projected loss of revenue is due to the city's ongoing structural underfunding: "Despite important debt relief measures by the state of Hesse, the real problem for Offenbach has not changed: The city is being reimbursed for essential expenses to which it is obligated under federal and state laws, particularly in the areas of youth and social welfare, to a greater extent than before, but still not in full. The KFA is not in a position to solve this underfunding, as we still have to generate too much of this legally required expenditure ourselves in order to be able to fulfill our mandatory tasks at all. This money is then lacking in many other areas, which is why the city has to keep putting the red pencil to it." Wilhelm pointed out that the city has had to cut back on its voluntary services for years, much to the chagrin of all citizens. "Every change in income and expenditure, no matter how small, immediately poses enormous challenges for budget planning."

For the city, the situation that is now emerging due to the KFA means that even more drastic savings will have to be made. "Between June and now, we have already made an incredible amount of effort to save a high double-digit million amount, including in public transport, after the property tax reduction at the beginning of the year, while costs continue to rise, and to reach a level that allows us to obtain budget approval. We achieved this on the assumption that the key parameters affecting the budget are known and will continue to develop reasonably favorably. We had already taken into account that the KFA funds could fall. However, the fact that they are falling so sharply is an extremely unfavorable development, which has overturned our plans and now presents us with very difficult decisions."

Further considerable savings are unavoidable, emphasized city treasurer Wilhelm. "We now know what we have to do and have two options. The first option is to reverse the property tax reduction of 100 points and thus a total of around 5 million euros. However, we want to prevent this at all costs if at all possible and it would hardly be enough on its own. The second option is to make radical savings. This is the path we will now be working on with all our might. It will become clear in the coming weeks whether this path will lead us to our goal or whether further steps are necessary." Wilhelm sees further savings potential of around 5 million euros in the municipal offices: "However, this means that some planned projects cannot be implemented for the time being." Due to long planning lead times, planned investment funds for individual other projects can also be partially taken into account in later financial years. The treasurer held out the prospect of another budget freeze of at least 20 percent for all departments in the coming year.

"However, tough savings will not remain abstract, they will have to become concrete and affect many areas," says Wilhelm. There is further potential for savings in areas such as road maintenance (1.5 million euros per year) and the city's job planning: "It is absolutely clear that there will not be anywhere near as many new jobs as in the past five years. We can only create the positions that are absolutely necessary due to new legal requirements."

Furthermore, the annual budget for smaller maintenance measures at schools and daycare centers amounting to 2.5 million euros could also be on the possible list of cuts, at least once: "We could cut this budget, as there is still money available from the budgets of previous years. This ensures that the planned modernization and maintenance measures at the schools and daycare centres can be implemented next year despite the savings. Further concrete proposals are of course welcome." According to Wilhelm, the major school renovation program, which is to be continued, is not up for discussion. "We do not want to and will not cut back on education in Offenbach. And we also want to maintain the already inadequate support for clubs and sports."

Wilhelm sees positive prospects in the Lord Mayor's work to attract new companies. "However, even the Lord Mayor cannot work magic and reverse decades-old trends in a very short space of time. The Samson example clearly shows that even great successes take longer to have a lasting effect on the city." According to Wilhelm, however, the city will hardly be able to manage on its own if the "injustices and deficits" of the KFA remain: "The previous KFA system and the state's debt relief programs do not prevent cities from repeatedly getting into financial difficulties. And Offenbach is by no means alone in Germany with this problem. There are good proposals for solutions to ensure that financially weaker municipalities are also reimbursed for what they have to spend as a result of decisions taken at other levels. We will continue to campaign for these solutions with all determination and in all committees and at all levels accessible to us."