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German Municipal Budgets Lay Bare Structural Shortfalls as Counties OK Deficits and States Expand Borrowing

Local leaders warn temporary relief fails to fix the structural funding gap.

Overview

  • The Diepholz county council approved a 2026 budget with a €19.9 million deficit and projects debt rising to about €133 million by 2029, with all parties blaming higher-tier underfunding.
  • Saarland’s parliament declared an “extraordinary emergency,” enabling €906 million in off–debt-brake borrowing for 2026 and planning regular new loans of €180 million per year, with the two-year budget slated for a vote later Wednesday.
  • In Augsburg county, budget talks opened with a shortfall still exceeding €10 million after one-offs, rising social and personnel costs, and a plan to take out a new €10 million loan.
  • State relief is arriving but remains partial: Thuringia’s cities and towns expect an extra €277 million over 2026–27 and demand enforcement of “who orders, pays,” while Dachau kept its levy stable thanks to a late boost in state transfers.
  • Local responses range from fresh debt to austerity: Bockhorn forecasts multi‑million loans from 2027 for a new primary school, Kirchlinteln cut services to trim its 2026 gap to €125,000, Kirchheim lifted its liquidity credit to €3.8 million, and Kaufbeuren reported weaker business tax, a new €7 million loan, and year-end debt near €68 million.