Kiel in distress: budget freeze due to massively increasing expenses!

Kiel in distress: budget freeze due to massively increasing expenses!

The city of Kiel is facing serious financial challenges. On May 23, Mayor Ulf Kampf (SPD) pulled the emergency brake and imposed a budget freeze because the deficit could rise from an initial 80 to up to 220 million euros. These developments are worrying for good reason. The main cause of this black hole is the exploding personnel and supply costs, which have increased by a whopping 68 million euros. Rising provisions for pensions, which are 56 million euros higher than the original plans, have been hit particularly hard, with a software error in the pension equalization fund (VAK) also contributing to the misery.

Anke Oeken from the Kiel Greens recently stated in a press release that the city's financial situation urgently needs a solution. The dramaturgy surrounding the rising costs of social assistance, particularly in child, youth and family welfare, is also further exacerbating the situation. In addition, increased interest burdens are putting a strain on public finances, which is dragging the forecast for 2025 into a further negative vortex, as losses of around 1.5 million euros are expected.

Budget lockdown and social responsibility

This budget freeze not only means a financial dilemma for Kiel, but also a cut in social services. Dr. Christina Schubert from the SPD council group described the situation as a turning point in budget policy and criticized the state policy. She criticized the fact that cities are being given more and more tasks without appropriate funds being made available for them. “We cannot afford cuts in the social and educational sectors,” continued Schubert.

Particularly important are the costs that arise from taking unaccompanied minor foreigners into care and the increased nursing home fees. These additional burdens add up to several million euros. The city of Kiel also felt infections in the municipal finance network: it received 26.6 million euros less from the municipal financial equalization than originally planned.

The outlook and solutions

The city administration is aware of the precarious situation and plans to take targeted measures to address the financial challenges. More than a moment's attention to spending seems necessary, as individual measures are unlikely to ensure sustainable budget stabilization. A confusing patchwork of financial arrangements needs to be reconsidered.

At the local level there is a uniform plea for better financial resources from the state and federal governments. Mayors are calling for the debt brake issue to be reformed in order to enable municipalities to achieve a real turnaround. Whether such a reform is realistic in the near future remains to be seen. The German Association of Cities is concerned in a quick survey: Almost 37 percent of the cities surveyed cannot present a balanced budget, and 95 percent rate their budget situation in the next five years as bad or very bad.

The pressure on municipalities to finance themselves from their own resources, while at the same time spending on social tasks is growing, is immense. The new federal government is urgently calling for measures to stabilize local finances. We can only hope that the political course will soon change direction and a solution will be found that can benefit the city of Kiel and its citizens in the long term.