Economic slump hits Thuringian municipalities hard

The economic slump is placing a heavy burden on the finances of municipalities in the German state of Thuringia. Carsten Rieder, the managing director of the Thuringian Association of Municipalities and Cities, stated that the forecast for business tax revenues has been significantly reduced. The expected increase is far from what was anticipated, with the total projected business tax revenue for Thuringia this year now standing at approximately 1.1 billion euros. Expectations for the coming year are also dampened.

The situation varies considerably among different cities in Thuringia, according to a dpa survey. The industrial and university city of Jena is facing substantial losses in business tax revenue, amounting to tens of millions of euros. In contrast, cities like Eisenach and Nordhausen, also industrial centers, are performing roughly in line with their financial plans. Steffen Liebendörfer, the mayor and finance director of Eisenach (CDU), reported that the situation in his city is currently relatively stable.

Rieder highlighted that the problem for cities and municipalities is not solely the more subdued development of overall tax revenues compared to earlier autumn tax estimates. "The crux is that expenditures are rising faster than tax revenues. This weakens the financial capacity of the municipalities." He described the current financial situation of these local governments as alarming. In addition to constantly increasing social welfare expenses, a constitutional court ruling mandating an increase in civil servant salaries will also have an impact, costing cities and municipalities around 20 million euros, Rieder noted.

Expenditures for childcare have also risen sharply, increasing by approximately 220 million euros within five years. While the state contributes its share, payments from the state treasury are not keeping pace with the escalating costs of daycare centers. This growing gap between rising expenses and slower revenue growth is exacerbating the financial challenges faced by Thuringia's local governments.