Alarm level red for cities: Financial crisis forcing radical cuts!

Alarm level red for cities: Financial crisis forcing radical cuts!

Wien, Österreich - The financial commission of the Austrian Association meets today and tomorrow in Vienna to discuss important consolidation measures for cities and municipalities. Experts from the Ministry of Finance, the Fiscal Council and the KDZ Center for Administrative Research take part in the meeting. Secretary General Thomas Weninger emphasizes that mayors and financial experts know savings potential in their cities. The aim is to exchange best practice examples and innovative solutions to improve the financial situation of the municipalities. The need for reforms is underlined by the current municipal financial forecast, which emphasizes essential measures for the coming years in order to make the consolidation contribution that the cities and municipalities have to do.

such as [kdz.eu] (https://www.kdz.eu/de/aktuelles/blog/gemeindefinanzprognose-dezember-2024- consolidation measures reports), the dependence on the framework conditions specified by the federal and state governments is significant. The forecast points out that, without countermeasures, performance can be expected, which could endanger the quality of the municipal general interest. The fiscal council estimates a need for consolidation of at least 4.4 billion euros for 2025.

critical location of the municipal finances

The financial pressure on many communities increases. Up to 40% of the municipalities could soon no longer be able to finance their ongoing operation independently. This means that municipalities have to check whether they can maintain their previous services in the desired quality. Support from the federal and state governments are urgently needed because without them painful austerity measures are inevitable. Despite additional funds from the municipal package, the liquidity of the communities remains a critical topic. Around two thirds of the municipalities are already affected in Carinthia.

The [kdz.eu] (https://www.kdz.eu/de/aktuelles/blog/welche-konse-auf-da-aufgrund-der-schwierigen- Financial) demands innovative measures to stabilize the municipal finances. Among other things, this includes a reform of property tax to strengthen the financing base, which has not been carried out for decades. A short -term increase in the lifting rates could also help support the financial situation. In addition, it is recommended to reduce expenses through increases in efficiency in administration and through possible cooperation between municipalities in order to use synergy effects.

The way to better framework conditions

In order to master these challenges, closer cooperation between the municipalities as well as with the federal states and the federal government is necessary to tackle the financial needs of the cities. Weninger demands that all regional authorities make their contribution to structural reforms. The results of the working group on the 74th Austrian City Day in Eisenstadt, which also deal with consolidation options, could offer new approaches to solve financial challenges.

The future of community finances depends on how quickly and effectively these challenges are addressed. It remains to be hoped that the applicable framework conditions will be adjusted in order to ensure a sustainable strengthening of the municipalities' finances and continue to be able to provide the citizens a comprehensive range of services.