At the end of the first quarter of 2023, the debt of the municipal core budgets in the state of Saxony-Anhalt was EUR 2,997 million. As reported by the State Statistical Office, that was EUR 215 million or 7.7% more than a year earlier. 54.8% of the liabilities were used for investment purposes (investments and investment promotion measures) and 45.2% to cover short-term liquidity requirements (cash advances).
The average per capita debt in the municipalities of the state of Saxony-Anhalt as of March 31, 2023 was EUR 1,371. That was EUR 90 per inhabitant more than at the same time last year.
At the end of the first quarter of 2023, the urban districts had a debt of EUR 1,081 million. Compared to March 31 of the previous year, this was an increase of EUR 214 million (+24.7%). Loans for investments increased by EUR 156 million (+40.2%). Loans to secure liquidity increased by EUR 58 million (+12.1%) in the same period.
At the end of the first quarter of 2023, the debts of the districts increased by EUR 19 million (+3.2%) to EUR 623 million compared to the first quarter of 2022. Loans for investments were reduced by EUR 15 million (-4.2%). Loans to secure liquidity increased by EUR 35 million (+14.3%).
On March 31, 2023, the debt of the district municipalities and associated municipalities was EUR 1,292 million. This meant a reduction in debt by EUR 18 million (-1.4%) compared to the same point in time in 2022. Loans for investments increased by EUR 25 million (+3.5%) and loans for securing liquidity fell by EUR 43 million EUR (-7.4%)
The Saxony-Anhalt Association of Towns and Municipalities is viewing the figures published today by the State Statistical Office on the significant increase in debt in the first quarter of 2023 with concern e.g. for energy or construction work, however, place an extraordinarily heavy burden on the budgets of cities and municipalities across the board,” said Bernward Küper, state manager of the Saxony-Anhalt Association of Towns and Municipalities today in Magdeburg.
According to the Association of Towns and Municipalities, the causes are complex. What is certain is that Corona has left its mark in many places, despite the recovery in tax revenue that can now be observed. On the other hand, the construction prices, which have risen drastically again since mid-2022, mean, among other things, additional borrowing for the implementation of necessary investments or support measures that have already begun or are planned, especially in the areas of daycare centers, fire brigades or school renovations. Added to this are the enormous financial challenges in connection with the refugee problem and the points of conflict between the state and local authorities regarding the past FAG negotiations. Here, Küper refers to the unsatisfactory situation that the state has been counting the relief initiated by the federal government for the municipalities for two years, including the increased federal contribution to the costs of accommodation in its favor in the local financial equalization law.
It is also worrying that the currently high collective bargaining agreement for the municipalities is not yet reflected in the current figures from the State Statistical Office. As a result of the wage agreement, municipal personnel costs are likely to increase by an average of +11.5 percent. Since it must also be assumed that inflation will only fall very slowly, a further increase in municipal debt over the course of the year is to be feared. The total debt of the cities and municipalities would then increase for the third year in a row.
With a view to the forthcoming negotiations on the FAG 2024, the Saxony-Anhalt Association of Towns and Municipalities is therefore pinning its hopes on the Finance Minister’s most recent announcements when presenting the results of the tax estimate, including the full consideration of the wage agreement when determining the FAG amount. The same also applies to the heterogeneous distribution of additional tax revenue that he mentioned, especially in the case of trade tax.
Especially with a view to tax revenue, Küper refers to a current state report on municipal financial equalization in Saxony-Anhalt. This certifies that the cities and municipalities in Saxony-Anhalt have a below-average tax capacity or, at EUR 878 per inhabitant in 2021, the lowest value in Germany. In addition, in a nationwide comparison of the tax rates for property and trade tax, the experts come to the conclusion that the cities and municipalities are fully exploiting their income potential.
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