In 2022, the city did significantly better financially than planned and feared because of the war in Ukraine. According to a report by the Treasury, she was able to make a profit of 551 million euros in the day-to-day management business. The city had set a surplus of 202 million euros. This left 349 million euros more than hoped for. There are two reasons for this: the income was higher than expected at 8.05 billion euros. And the departments spent less than they had requested from the city council for their work.
Treasurer Christoph Frey does not want to be careless in view of the win. “Our budgetary situation is ambivalent, if not downright deceptive,” he said, summing up the year 2022. In particular, he warned against increasing spending more and more, since the income from taxes, which is very stable at the moment, could quickly collapse. “We always have to add new rooms to the Munich house, but we also have to make sure that the roof grows with it, because otherwise it rains in.”
For the second year in a row, investments are extremely high, especially in the construction of schools, for transport and for apartments. The city spent a total of almost 1.5 billion euros in 2022. To do this, she had to borrow 1.11 billion euros from banks. In order for Munich not to slip into a debt trap, the city must generate even more surpluses in the future, the treasurer demands. The budget situation is good at the moment, but needs to get better “so that the historically high investments of the next few years can be paid for.”
The city council approves a budget for the coming year in advance in order to be able to calculate the costs. The treasurer pointed out that new rules have been in effect since December 2022. Until now, the municipal finance department had set a target of a surplus in current business of 400 million euros. Incidentally, the city council had clearly missed this in 2022 with an estimated surplus of 202 million. In the future, however, the profit in the budget plans should be significantly higher, which could lead to painful cuts in expenditure in the departments, given the best-case scenario of a slight increase in income. According to the city council decision, from 2024 onwards, 65 percent of the amount that the city has to pay for in debt with its investments is required.
If you take the 2023 budget as a reference, the city would have to make more than one billion euros in profit from ongoing business. Because the balance of investments is 1.75 billion euros. If you take 65 percent of that, you end up with 1.14 billion euros.