The city will emerge from the current year with a much smaller budget deficit than expected. On Wednesday, the city council’s finance committee approved the supplementary budget for 2022, which means that the previous deficit in the profit budget is reduced by more than 200 million to 42 million euros. This is mainly due to the income from trade tax: a whopping 280 million euros more than originally assumed will flow into the city coffers this year. Overall, tax revenue will increase by 330 million euros. As far as ongoing administrative activities are concerned, the Treasury now expects a surplus of 349 million euros.
Overall, the supplementary budget is shaped by the financial effects of the corona pandemic and, to a much greater extent, by the effects of the war in Ukraine. The latter accounts for 146 million euros, of which more than 100 million are for the accommodation of refugees. For the effects of the corona pandemic, 51 million euros more are needed than planned.
Politicians want to continue to act cautiously
All in all, it is a “solid budget,” said Florian Roth, spokesman for financial policy for the Greens/Pink List. Despite crises, the city is proving to be capable of acting. The supplementary budget shows that the city government is pursuing a “solid financial policy,” said Christian Koening, spokesman for SPD/Volt financial policy. In view of current warnings of an impending recession, however, one should not “go all out” but must continue to act cautiously. The level of trade tax revenue may not remain the same.
The city is planning to take on almost one billion euros in new debt for investments in housing and school construction, for climate protection and for the city’s hospitals. The debt mountain is growing to around 2.5 billion euros – a quadrupling since 2019. The development of debt is due to the “considerable investments in urban infrastructure”, said treasurer Christoph Frey (SPD). He described the city’s financial situation as “still stable”. However, recent developments in terms of the economy and inflation suggest that the real stress test for the city’s budget is still to come.