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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.

Verwittertes Schild an einer Stadtverwaltung: Den Kommunen geht das Geld aus
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Overview

  • 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.