In 2025, core and extra‑household finances of German municipalities and municipal associations posted a financing deficit of €31.9 billion, according to provisional quarterly treasury statistics released by the Federal Statistical Office (Destatis) on Wednesday. This marks the highest municipal deficit since German reunification in 1990, eclipsing the previous record of €24.8 billion in 2024 by an additional €7.1 billion.
The deficit meant that 7.5 % of municipal expenditures could not be covered by regular revenues and had to be increasingly financed through borrowing. By 30 September 2025, municipal treasury debt had risen 16.5 % compared with the previous year, driven mainly by loans taken from treasury banks.
Core‑household deficits were the main culprit: they reached €29.4 billion, an increase of €5.1 billion year-on-year. Extra‑household deficits quadrupled to €2.5 billion, reflecting that these non‑core entities-funds, institutions, and companies financed primarily through municipal grants-have become more dependent on core‐budget support.
Total expenditures for core and extra‑households rose 5.6 % ( €22.4 billion) to €423.3 billion. Personnel costs were the biggest driver, climbing 6.8 % to €113.4 billion because of wage increases for federal and municipal employees in April 2025 and a higher staff count. Operating expenses for goods rose 3.9 % to €99.1 billion, a smaller increase than in earlier years.
Social benefits received €90.0 billion, up 5.9 %. The largest gains were in benefits more heavily shouldered by municipalities than by the federal government: inclusion assistance under SGB IX increased 11.2 % to €25.2 billion, while child and youth services under SGB VIII rose 8.8 % to €20.0 billion. By contrast, assistance under the Asylum Seekers Benefits Act fell 10.9 % to €3.4 billion.
Capital expenditures totaled €53.9 billion, up 3.5 % from the previous year-after two years of higher growth rates (12.5 % in 2024 and 11.9 % in 2023). Construction costs increased 4.3 % to €38.0 billion.
Revenue, after adjustments, reached €391.4 billion in 2025, up 4.1 % ( €15.3 billion) from 2024. Net tax receipts grew 3.4 % to €136.5 billion, largely due to a 7.5 % rise in the municipal share of income tax. The share of sales tax grew 4.3 %, while net business tax revenue increased 1.0 %. Ground rent revenues remained flat at €14.5 billion in the year the tax reform became effective.