The large cities in North Rhine-Westphalia are pleased that the federal government has finally presented the long-promised core elements for a solution to old debts, but they consider these measures insufficient. Christian Schuchardt, the CEO of the North Rhine-Westphalia Municipal Day, told the “Rheinische Post” (Wednesday edition) that the federal government’s commitment to aid with historical debts is initially a positive sign. However, Schuchardt emphasized that it is crucial that the full 164 million euros in these additional funds for old debts arrive directly at the municipalities in NRW, and not be offset against state-level programs.
The leading association for local governments expressed deep criticism regarding the amount of money allocated. Schuchardt argued that the planned aid for old debts, as set out in the federal coalition agreement, is nowhere near enough to cover the rapidly increasing municipal deficits, which are generating new debts. According to treasury statistics, the deficit in municipal budgets in NRW increased by 9.4 billion euros in the last year alone-representing a 37.5% increase compared to 2024. Consequently, the newly announced federal aid for old debts amounts to little more than a drop in the ocean, and its impact will remain marginal.
For these escalating problems, the North Rhine-Westphalia Municipal Day urged the state government to immediately increase the so-called bundling rate for municipalities under the Municipal Financing Act to 28 percent. They calculated that this measure would require the state-which has historically managed to generate surpluses-to allocate an additional 3.6 billion euros to the municipalities, thus making a fair contribution to the burden of local responsibilities. Furthermore, they called on the federal government to take further action to account for the nationwide deficit faced by cities, districts, and municipalities, suggesting that increasing the share of municipalities in VAT revenues would be one way to achieve this.