Carinthia in the financial crisis: cities and municipalities are fighting for support!

Carinthia in the financial crisis: cities and municipalities are fighting for support!

Wien, Österreich - More and more communities in Austria are faced with financial challenges. At a time when the requirements for local administrations increase, countries and communities are looking for new sources of money to maintain their services. Carinthia's Governor Peter Kaiser recently was in Brussels to seek support for the budget crisis. The federal government, the federal states and the municipalities gather in Vienna to find solutions together and to process the pressing financial questions. Krone reports of a proposal by the municipal association President Pressl, who stimulates a debate on self-residents for public services.

These deductibles could include ambulance fees and contributions for the emergency services and the use of kindergarten offers. However, this could encounter resistance, especially from the Greens, the free kindergartens and expansion of childcare. KDZ expert Karoline Mitterer emphasizes the limited scope of action of the municipalities and warns that many municipalities are forced to postpone investments and reduce administrative costs.

Financial framework and challenges

The financial situation of many communities has increased further in recent years due to various crises. After overcoming the financial crisis in 2011, new challenges presented the municipalities with great tasks. The 2015 migration wave, the pandemic with its test and vaccination organizations as well as the current consequences of the Ukraine War, which comments in an energy crisis and increasing living costs, a significant burden on municipal finances. These developments lead to stagnating income with increased expenses at the same time and provide many municipalities with major challenges. Kommunal explains that the general economic conditions have a direct impact on the financial means of the communities.

In order to counteract this misery, Emperor demands new fiscal rules from the European Union and direct access to EU funds. While the EU Commission is planning to pay funding to the member states, Kaiser rejects these centralization plans. In addition, an adaptation of the Maastricht criteria is required to expand the financial scope of the municipalities.

Tax reforms as a solution?

In the discussion about new financing models, the focus is also on property tax. Kaiser suggests increasing property tax, which could bring up to 2.7 billion euros a year. The tax revenue due to property tax is currently 792 million euros, and a return adjustment to inflation could generate an additional 380 million euros. The fiscal council even suggests double the property tax, which would bring in 1.6 billion euros per year. A model from Baden-Württemberg shows that a soil tax could generate up to four times as high as the conventional property tax.

The challenges that the municipalities stand in front of are diverse and affect numerous areas. It is urgently needed to raise efficiency potential in the administrations and to adapt the existing legal framework in order to meet the increasing requirements. The municipal association will continue to be faced with these pressing topics and hopes for constructive solutions with the new government.