Overview
- New checks in Hesse show fewer balanced budgets, with only 103 of 421 municipalities deficit‑free in 2025 after 138 in 2024 and 201 in 2023, and just 3 of 14 in Groß‑Gerau presenting a balanced 2025 plan.
- Experts note a structural mismatch in public finance as municipalities handle about 28% of spending but receive roughly 16% of tax revenue, while key social costs jump sharply, including care and child‑youth welfare at about +17%.
- Hesse says support is at a record, citing €7.4 billion via fiscal equalization, €300 million in immediate aid, around €4.5 billion in 2026 outside the equalization system, plus €3 billion from a federal infrastructure fund.
- Local leaders argue the measures fall short, and the German Cities and Municipalities Association is urging immediate relief and a moratorium on new tasks without funding.
- To plug gaps, many councils have raised property tax rates beyond neutral levels and are weighing new levies such as a packaging tax, while cities without approved budgets face provisional spending constraints under state oversight.