Tight city budget persists due to the unaccounted absence of 70 million euros from the city's funds.
Dresden's financial landscape is far from rosy. The Saxon state capital is grappling with a hefty budget deficit of approximately 70 million euros.
By Hermann Tydecks
Dresden - Despite unexpectedly higher revenues in 2024 (primarily from increased tax revenues and government funds), the city spent a staggering 2.48 billion euros more than it took in last year. This concerning revelation comes from the annual report.
Mayor Dirk Hilbert (53, FDP) announced job cuts due to the budget crunch. The unexpected surge in revenues was attributed to various factors, including enhanced tax collections and government allocations. However, these funds were quickly diverted to cover the surge in expenses this year.
Higher Public Expenditures
Increased personnel costs, rising expenses for goods and services such as energy and security, and continued heavy spending in the social sector are a few factors contributing to the growing budget deficit. These trends are expected to persist in 2025, leading to further budgetary pressure.
The May tax forecast suggests relatively stable revenues for the current and subsequent year. However, the Free State, expected to collect less, will also disburse less funding to Dresden: around 12 million euros less in 2025 and a staggering 30 million euros less in 2026.
Dresden doesn't possess a "magic bag" to finance everything, cautions Mayor Dirk Hilbert (53, FDP).
To consolidate the budget, Dirk Hilbert plans to reduce the number of administrative jobs from the current 7,375 to 6,500 full-time positions by 2029 (also through retirements).
Peter Krüger (64, CDU) welcomed the plan, noting, "This is one of the most important measures to consolidate the budget."
Photo: Norbert Neumann
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Behind the Budget Shortage
Like many cities in Germany, Dresden is grappling with budget deficits due to several factors:
- National Fiscal Pressure: The German government's financial balance remains in deficit, which affects the flow of federal funds to municipalities.
- Rising Costs and Inflation: Persistent inflation (forecast at 2.1% for 2025) increases the costs of public services, energy, and infrastructure maintenance.
- Aging Population: An aging workforce puts pressure on social services and pension systems, reducing municipal fiscal flexibility.
- Infrastructure Investment: There's a growing need for infrastructure renewal and development.
- Political and Policy Uncertainty: National political instability delays decisive fiscal action and reforms at the national and local levels.
To tackle these deficits, Dresden and other German cities are prioritizing infrastructure development, seeking increased private sector investment, and awaiting national reforms to provide additional fiscal flexibility.
Businesses in Dresden may find it challenging to thrive due to the city's significant budget shortage, as the city has spent 2.48 billion euros more than it earned last year, according to the annual report. The Mayor, Dirk Hilbert, has announced job cuts as a means to consolidate the budget, aiming to reduce administrative jobs from 7,375 to 6,500 full-time positions by 2029.
