The nation’s 13 state capital mayors have issued a stark warning to Chancellor Friedrich Merz and state governments, demanding a fundamental overhaul of municipal financing structures. Their urgent appeal, signed by the leaders of cities including Stuttgart, Dresden and Munich, highlights a deepening financial crisis within local administrations threatening essential services and long-term stability.
The mayors assert that a staggering €24.8 billion shortfall is projected for 2024, the largest deficit recorded since 1990. This crisis stems primarily from escalating social welfare expenditures – including assistance, youth services and integration support – alongside rapidly increasing personnel costs. The strain is also acutely felt in the operation of public hospitals and the provision of public transport, areas frequently cited as critically underfunded.
The core of the mayors’ demand revolves around the consistent application of the principle of “who orders, pays” – a framework currently limited to relationships “between” state governments and municipalities, but conspicuously absent from federal obligations imposed on local administrations. A commissioned study from Stuttgart validates this legal loophole, exposing how it increasingly burdens cities and municipalities.
The appeal outlines three core principles for reform. First, any future financial burdens placed on municipalities by the federal government must be fully compensated. Second, the municipal share of Value Added Tax (VAT) should be adjusted or existing overcharges addressed to remedy past imbalances. Finally, both the federal government and state authorities must commit to refraining from establishing new obligations that negatively impact local finances.
The mayors’ call raises profound questions about the distribution of power and responsibility within Germany’s governance system. While the federal government frequently delegates tasks and responsibilities to local authorities, the corresponding financial support has failed to keep pace, creating a system where municipalities are increasingly shouldering the burden of national policy decisions without adequate resources. This situation threatens to undermine local autonomy and potentially compromise the ability of cities to deliver essential public services, potentially fueling political instability and widening the gap between urban centers and rural areas. The response from Chancellor Merz and state governments will be crucial in determining the future of local governance in Germany.