High social costs: local authorities receive extra aid from the state

The state of Saxony wants to provide financially strapped municipalities with around 830 million euros in additional aid in 2027 and 2028. Finance Minister Christian Piwarz (CDU) has agreed this with the presidents of the leading municipal associations, his ministry announced. However, the state would have to take out some loans itself for this, it said. Overall, the volume of municipal financial equalization will increase to around 4.9 billion euros in the 2027/2028 double budget.

The agreement reportedly includes a special equalization of social security contributions for the independent cities and districts. This alone is to account for 322 million euros per year. In addition, the state subsidy for the operating costs of kindergartens is to increase and health resorts are to receive compensation for their special tasks for the first time: 7 million euros per year.

Municipalities press for reforms

Saxony is thus helping the municipalities with the costs of social services caused by the federal government, Piwarz clarified. "We have bought ourselves time with the agreement made possible by state debt," stated the President of the Saxon Association of Towns and Municipalities, Bert Wendsche (non-party). "Time to bring public revenue and expenditure back into balance." This would require reforms in Saxony that would make the public sector more digital, faster and, above all, leaner. On the other hand, the federal government is called upon to curb the spending dynamics in the social sector or to bear the costs completely itself.

The agreement will by no means eliminate the budget imbalance of the districts, explained the President of the Saxon Association of Districts, Henry Graichen (CDU). Significant budget gaps remain.

The President of the State Tourism Association, Alexander Dierks (CDU), described the planned equalization of burdens for the health resorts as an important milestone. This would help to secure the infrastructure in the health resorts, the health services and the quality of tourism in the long term, he said.

The agreement is now to be included in the government's draft for the double budget and must then be approved by the state parliament.