German Municipalities Face Record €24.8 Billion Deficit as Social Costs Surge

Municipalities call for federal reforms and increased funding to address financial strain driven by rising social expenditures and modest revenue growth.

German municipalities recorded a €24.8 billion deficit in 2024, the highest since reunification, with 6.2% of expenditures unfunded by regular income.
Social spending rose by 11.7% to €84.5 billion, driven by adjustments to welfare and citizen's income rates that expanded eligibility and benefit levels.
Personnel costs increased by 8.9% to €88.1 billion in 2024, reflecting wage adjustments and staff expansion in key areas.
Municipal tax revenues grew by only 1.5%, failing to keep pace with an 8.8% rise in expenditures, exacerbating fiscal challenges.
Municipal associations demand federal intervention, including full refugee accommodation cost coverage and a tripling of the municipal share of VAT revenues to address structural imbalances.