Forecast: local authorities must expect falling revenues

The budget situation in Saxony's state government and local authorities is likely to worsen even further: The forecast published last week by the federal and state tax estimate working group shows that the state and local authorities are likely to have less revenue than previously forecast, the Ministry of Finance in Dresden announced. "The current tax estimate does not provide any new leeway," commented Finance Minister Christian Piwarz (CDU) on the figures.

Around one billion euros less in municipal coffers by 2030

In concrete terms, the Dresden Ministry of Finance expects 20.2 billion euros in tax revenue in the current year - 27 million euros less than previously expected. Saxony's municipalities will be hit much harder by the forecast, primarily due to a possible drop in trade tax revenue, it continues. According to the Ministry of Finance, revenue in this area will fall by around 200 million euros this year alone. In the coming years, the shortfall will increase.

By 2030, the Saxon Association of Towns and Municipalities (Sächsischer Städte- und Gemeindetag, SSG) even expects a shortfall in revenue of 1.1 billion euros compared to previous forecasts. This will "further exacerbate the catastrophic budget situation of the municipalities", it continues. "The worsening tax estimate will be met with a municipal budget deficit that will already amount to over one billion euros in Saxony by 2025. Despite consolidation measures in the municipalities, expenditure continues to rise faster than income," said SSG President Bert Wendsche. The state must do significantly more, the president demands, in view of rising revenue forecasts at state level from next year.

Ministry of Finance announces support for municipalities

According to the forecast, the Free State will receive 43 million euros more in 2027 and 2028 than previously assumed. However, in view of the cost pressure caused by the Iran conflict and a weakening economy, Finance Minister Piwarz sees a question mark over these expectations. The CDU politician announced support for the municipalities with regard to the deliberations on the future 2027/28 double budget.

According to the latest estimates, Saxony's state government is lacking around 2.3 billion euros in the double budget for the next two years. At the end of April, the cabinet agreed, among other things, to cut 8,773 jobs among state employees by 2040 in order to improve the state's financial situation. The state government is also planning a comprehensive administrative reform and new debt amounting to around 1.4 billion euros. Half of the money is to go directly to the municipalities in the state.