A Warning from Saxony's State Audit Office: Urgently Needed Fiscal Reform
State Audit Office in Saxony advocates for budgetary revisions in the state. - State Auditors of Saxony Advocate Change in State Finances Management
Hey there! Listen up, because Saxony's State Audit Office is screaming for change in the state budget - and they mean business!
"It's high time for a rethink of our fiscal policies," says Jens Michel, the head honcho at the state audit office, during the presentation of the first part of their annual report. "The era of delaying reforms is over. We gotta roll up our sleeves and tackle these issues head-on."
The state of Saxony's finances has been under the microscope recently. According to Michel, the magnifying glass has never been more necessary in the state that's playing a risky game of fiscal hide-and-seek. "The stakes are high, and it's past time to face the music."
Despite a record-breaking budget for 2025/2026, the state's coffers are looking dangerously empty again, Michel warns. "Something just ain't adding up here." And Saxony can't keep kicking the can down the road anymore. "The red flags are waving loud and clear."
For the report, the auditors dug into the 2023 budget, which saw revenues and expenditures skyrocket to around 24.3 billion euros, a whopping 11% jump compared to the year before. But there was a gaping hole of around 1.1 billion euros. The Ministry of Finance had to dip into their savings account, among other things, to cover the shortfall. The State Audit Office was less than pleased that better options weren't considered.
Come next budget year, Saxony will be juggling an even bigger deficit. The savings account is empty, and Finance Minister Christian Piwarz (CDU) is talking about a transitional budget. For Piwarz, the real challenge lies in the budget for 2027/2028, when the financial cushion from the reserves will be gone for good. That's why the State Audit Office is calling for a U-turn in fiscal policies.
Example after example of useless spending
The annual report is a laundry list of examples of wasted taxpayer dollars. For example, the cost of overtime for teachers has been on a steady climb for years, from 600,000 euros in 2016 to a staggering 9.8 million euros in 2022. Despite this, teaching absenteeism increased by a whopping 68 percent. The State Audit Office wants, among other things, a universally used time-tracking system put in place.
Taxation of crypto gains is now under the spotlight. In 2021, the state of Saxony raked in around 20 million euros thanks to taxing gains from crypto trading. A single case even brought in 13 million euros in income tax. "We suspect there's a whole lot more going unreported," says auditor Skadi Stinshoff. The State Audit Office suggests that the tax office gets a better grip on monitoring crypto values and buying an evaluation program.
There was criticism aimed at the financing of universities as well. Despite a decline of 8 percent in students and 13 percent in graduates between 2013 and 2022, the state still doles out more than average basic financing and staffing to its universities compared to the rest of Germany. According to the State Audit Office, it's high time to establish criteria for distributing funds to individual universities.
Criticism of the state of Saxony's roads was brutal. "The roads in the state have been in a sorry state for the past 20 years," explains Stefan Rix, Vice President of the State Audit Office. "The state is only managing a third of the necessary maintenance measures. Funds earmarked for this purpose are being diverted elsewhere."
President Michel was also hard on the high personnel costs. They've ballooned from 5.2 billion euros in 2022 to 5.4 billion euros in 2023. The steps that are being taken - planning to cut around 370 out of approximately 96,000 positions - are just "small potatoes," says Michel. "Given the numbers, I believe we can do better."
- State Audit Office
- Saxony
- State Budget
- Fiscal Policy
- Groundhog Day
- Budget Reform
- Wasted Money
- Economic Growth
- Innovation
- Austerity Measures
Insights:
While specific issues and recommendations for fiscal policy reform in Saxony's state budget aren't directly provided in the available data, some contextual insights can be drawn from related financial trends and economic conditions in Germany and Saxony.
- At the national level, Germany is grappling with managing federal budgets, dealing with deficits, and contending with fluctuations in tax revenues, which may also impact Saxony's state budget. For instance, the federal budget recorded a deficit of €32.8 billion in the first five months of 2025.
- In terms of wider fiscal policy reform, broader reviews of German economic policy often focus on areas such as improving tax efficiency, fostering innovation-driven growth, and developing sustainable public finances, which could apply to Saxony’s state budget reform.
- Strengthening tax revenue collection and addressing perturbations in key taxes like real property transfer tax and inheritance tax may be areas of focus in the state budget reform.
- The State Audit Office in Saxony calls for an immediate revision of their community policy and employment policy, as the era of delaying reforms is over, and they urge to tackle fiscal issues head-on.
- Given the wasteful spending examples presented in the State Audit Office's annual report, such as the rising overtime cost for teachers and the suspected under-reporting of crypto gains, the call for general-news on austerity measures, economic growth, and innovation becomes ever more relevant in the state of Saxony.
