The Federal Statistical Office released data on the finances of German municipalities on Tuesday, showing that the financial situation of cities and towns in Germany is as bad as it has been since reunification. The municipalities’ expenses increased significantly in 2024, resulting in the highest municipal deficit since reunification. The cumulative deficit, excluding the city-states of Berlin, Bremen and Hamburg, amounts to 24.8 billion euros, up from 6.6 billion euros in 2023.
Six point two percent of the expenses were not covered by regular income, but rather financed through financial reserves or the issuance of loans. The municipalities’ debt and debt of municipal associations increased, rising by 9.5 percent or 14.7 billion euros to 169.4 billion euros by the end of 2024. The cumulative debt of the federal government, states, municipalities and social insurance funds, the so-called “public consolidated budget” reached 2.509 trillion euros by the end of 2024.
Expenses of the municipalities’ core and extra budgets increased by 12.6 percent, outpacing the 7.6 percent growth in income. The main contributor to the municipalities’ expenses was the significant increase in social welfare spending, which rose by 11.7 percent or 8.9 billion euros and totaled 84.5 billion euros in 2024. This was largely due to changes in the social welfare and citizen’s allowance regulations, effective as of January 1, 2024, which led to more people receiving these benefits.