Saxony’s municipalities are tackling their ongoing, dramatic budget crisis with drastic cuts in capital expenditures and increased short-term borrowing. This is according to a special edition of the Bertelsmann Stiftung’s Municipal Finance Report.
Investments Down by Nearly a Fifth
According to the report, investments in Saxony plummeted by 19 percent last year to 2.1 billion euros. This puts the Free State of Saxony in a class of its own compared to other German states. Only Brandenburg and Hesse also saw a decline in investments, but by just 5 percent and 2 percent, respectively.
Consequently, investment-related debt in Saxony is comparatively low (3.38 billion euros). In contrast, local governments in Saxony made particularly heavy use of cash advances—which are considered especially problematic because they are not backed by any assets—accumulating 889 million euros in debt through this means—well over twice as much as in 2024 (375 million euros). Among the larger federal states, this represents the second-highest increase, behind Brandenburg.
