Preliminary data released by the Federal Statistical Office (Destatis) reveals a significant financial shortfall for core and supplementary budgets of municipalities and municipal associations (excluding city-states) in Germany during the first half of 2025. The deficit reached €19.7 billion, marking a continued upward trend compared to €17.5 billion in the first half of 2024 and €7.3 billion in the first half of 2023.
The deficit is primarily driven by the core budgets, which registered a shortfall of €19.0 billion as adjusted expenditures exceeded revenue. Supplementary budgets recorded a deficit of €0.7 billion, a notable contrast to the slight surplus of €35.2 million observed during the same period in 2024.
The widening gap stems from expenditure growth outpacing revenue increases. Total adjusted expenditures for core and supplementary budgets rose by 6.9 percent, or €12.8 billion, to €198.7 billion in the first half of 2025. Adjusted revenues, while also rising, increased at a slower pace, climbing 6.2 percent, or €10.5 billion, to reach €179.0 billion.
Expenditure increases were relatively uniform across key categories. Personnel expenses rose by 6.3 percent to €52.0 billion, current operational expenses increased 5.6 percent to €47.6 billion and social services expenditures grew 6.4 percent to €44.5 billion. Capital investments also saw a rise of 5.5 percent, reaching €22.6 billion. Furthermore, municipalities and municipal associations increased subsidies for ongoing purposes to the non-public sector (such as the promotion of day-care centers and institutions run by private organizations) by 7.9 percent to €24.1 billion. A significant increase was also observed in municipal interest expenses, rising 18.8 percent to €2.1 billion.
Net tax revenues for municipalities and municipal associations experienced moderate growth of 2.8 percent to €56.5 billion compared to the previous year. Net business tax revenues remained largely unchanged at €31.4 billion (+0.4 percent). Conversely, revenues from administrative and usage fees rose considerably at 8.2 percent to €25.1 billion.
The inclusion of approximately 440 public transport companies into the supplementary budgets from the second quarter of 2023, following the introduction of the Deutschlandticket and the increased reliance on public funding, complicates year-on-year comparisons. Analyzing core budgets alone provides a clearer picture, revealing a strong increase of 9.2 percent in adjusted expenditures from the first half of 2023 to the first half of 2024. This increase subsequently slowed to 6.6 percent from the first half of 2024 to the first half of 2025. Core budget revenues rose 3.4 percent from the first half of 2023 to the first half of 2024 and then increased by a more robust 6.3 percent from the first half of 2024 to the first half of 2025, a figure influenced by the forward scheduling of some state payments from the second half of 2025 into the first half of 2025.