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Struggling Finances for Schleswig-Holstein Cities: Facing Severely Reduced Revenues
Cities in the federal state of Schleswig-Holstein are grappling with significant financial deficits, according to the city association. The managing director of the association, Marc Ziertmann, announced that the northernmost federal state had a financial deficit of approximately one billion euros in 2024. With further reductions in revenue expectations due to the latest tax forecast, cities are facing more painful shortfalls in 2025.
Cities in Schleswig-Holstein are expected to generate around 4.7 billion euros in their own tax revenue, 149 million euros less than previously estimated. The Kiel finance ministry attributes the decrease primarily to lower business and income taxes and a decrease in income tax due to changes in tax law. As a result, cities are resorting to spending freezes. Norderstedt has been implementing these cuts since Tuesday, while Kiel began implementing them on Friday. All cities are seeking strategies to navigate the financial crisis.
Many services are legally mandated and cannot be altered by the municipalities. However, non-mandated services, such as sports, culture, and support for associations and public institutions, are essential for local communities.
The city association calls on the state to refrain from austerity measures that disproportionately impact municipalities and, if needed, to reverse them. Cities should also have a significantly larger role in the federal special fund due to the investment and maintenance backlog in infrastructure and a participation quota of over 50 percent in this regard. Furthermore, the federal government must provide municipalities with higher revenues by involving them more in the federal tax revenue.
While the specific demands from the Schleswig-Holstein city association are not detailed, concerns likely include increased funding for infrastructure improvements, support for local economic development, and initiatives that boost economic growth and resilience. Schleswig-Holstein's strategic importance and the region's economic challenges, exacerbated by global uncertainties and infrastructure costs, must be addressed through coordination between local and national authorities to ensure cities receive necessary support for economic and infrastructure development.
- The financial crisis facing cities in Schleswig-Holstein calls for a comprehensive review of the community policy, particularly in relation to the participation quota of municipalities in the federal special fund for infrastructure.
- In light of the struggling finances and reduced revenues, the employment policy must be reconsidered to attract new industries and boost economic growth in Schleswig-Holstein.
- In the face of the financial deficits and austerity measures, it is paramount for the state and federal governments to collaborate on finance, business, politics, and general-news policies to ensure the prosperity of Schleswig-Holstein's cities and their local communities.
