The municipalities are missing 11 billion euros

Cities, communities and counties have higher costs and a lot to do in the Corona crisis. Tax losses and repayments are threatened as early as May. At the same time, daycare fees and entrance fees are omitted.

Closed kindergarten in Frankfurt (Oder)

Kitas, schools and almost all shops are closed. Daily life pauses in many places, which also affects the work of cities, municipalities and districts. The municipalities have plenty to organize with the Corona crisis – and at the same time their income will soon decline.

When more people become unemployed, tax payments decrease and spending increases, cities, municipalities and counties need help quickly. “That has to happen quickly, otherwise the municipalities will soon face liquidity problems,” said Hans-Günter Henneke, managing director of the district assembly, the FAZ. Until then, the federal and state governments would have to support the municipalities extensively, demands Henneke.

Sometimes there is talk of an impending wave of bankruptcies among municipalities. Henneke speaks against it, praises their use in the Corona crisis and continues to see municipalities as central service providers in Germany. “Every word of bankruptcy is wrong and destroys trust in the state,” he says. Counties and municipalities cannot go bankrupt. At the moment, the municipalities have a lot to do, especially in the health departments, are keeping facilities closed and are helping to combat the pandemic.

Closed swimming pool in Munich
Closed swimming pool in Munich: Image: dpa

For Henneke, a sober analysis of the reduced income and additional costs is required: “What do we need now? No excitement, but quick, concrete and reliable help. ”In his list, which is based on data from the Federal Ministry of Finance and his own calculations, he comes to the financial requirement of 11.5 billion euros. “That was not talked about, we can put our hands on the fire for that,” he said.

Additional expenditure in the health authorities

In the next few months, for example, more people than before will likely be unemployed and receive state aid. “What we do know is that the number of Hartz IV households could increase by around 1.2 million,” said Henneke. The district council expects this to result in additional costs totaling 9.5 billion euros. The proportion of districts and urban districts is 4 billion euros, of which the federal government in turn contributes 49 percent. Therefore, additional municipal expenditure of 2 billion euros is incurred here.

The focus of the municipal financial worries is on tax revenues, which depend on the further course of the corona pandemic and are therefore unclear. For the city council, the decisive factor is how long public life is suspended. “However, it is already certain that the budgets of the cities will be massively affected, because tax revenues are already falling,” said their general manager Helmut Dedy on request. Swimming pools, theaters and many other public facilities also lack the usual income. Meanwhile, the corona crisis incurs additional expenses, for example in the health authorities. Dedy does not name any amount as a financial requirement and calls, as a message from the federal and state governments, not to leave the municipalities out in the rain.

Closed zoo in Straubing
Closed zoo in Straubing: Image: dpa

One anchor of the income of cities and municipalities is the trade tax, which the companies pay on site and which amounted to around 56 billion euros in 2018. This will decrease significantly when corporate profits fall, which is only reflected in tax revenues later. Losses in income tax, visitor’s tax or bed tax are already noticeable in the municipal coffers.

Lost fees at daycare centers and museums

If the tax revenue falls like the calculation of the Federal Ministry of Finance for the federal budget, cities, municipalities and districts are missing around 12 billion euros. “If that is true, we not only have tax losses on the income side, but also other income losses for contributions and fees at daycare centers, museums or waste disposal,” said Henneke from the district council. He expects a further billion euros for fee reductions and also 1 billion euros for additional expenses during the Corona period.