Municipalities in Austria: Financial emergency and reform needs increase!

Municipalities in Austria: Financial emergency and reform needs increase!

Afritz, Österreich - On June 23, 2025, FPÖ Mayor Maximilian Linder and Andreas Rabl held a press conference as part of the first Freedom Mayor's Day to point out the financial problems of the cities and municipalities in Austria. The main topic of the conference was the Austrian financial equalization, which, according to Rabl, presents structurally weak, shrinking and aging communities with considerable challenges. The declines in the funds are due to emigration and economic framework conditions, which is why a reform of the financial equalization is inevitable.

Rabl pointed out that the current distribution of funds, which is mainly based on the population, disadvantages municipalities with declining development. In order to fix this problem, he called for the Swiss model to be based on the Swiss model, which uses three-stage compensation through cargo, resource and hardship compensation. Currently, only 4% of the municipalities of the municipalities come from self -raised taxes, while in Switzerland and Iceland self -financing is 70% and 90%.

Financial situation of the municipalities

Maximilian Linder addressed the increasingly precarious financial situation of many communities. Not only are these not only unable to pay wages, but are also faced with a variety of new tasks, such as childcare and social services. The forecasts show that in 2019 47% of the earnings shares for municipal tasks remained, while it will only be 38% in 2025. Rabl also criticized the exclusion of the municipal level of important decisions according to Article 15a of the Federal Constitutional Act.

The forecast of the municipal finances by 2027 shows a growing revenue spending scissors, even after the new financial equalization. Around every second community is expected to have a negative free financial tip. This is particularly worrying because the requirements for the communities in the areas of climate protection and mobility increase. Many municipalities will have difficulty financing necessary investments because their expenses increase faster than the income.

outlook on future financing challenges

According to a study by the KDZ - Center for Administrative Research, the liquidity of the municipalities will remain at a low level by 2023, similar to in 2020. In particular, an increasing number of downhill communities is predicted without the financial possibilities for the design of their future. In the future, the public savings rate will also drop from 13 to 15 percent to only 5 to 9 percent.

The earnings shares of the municipalities, which make up about 40% of their income, will only increase by 2.5 to 4.9 percent annually in 2024 to 2027. The increasing expenses, which are due to price increases and higher material and personnel costs, cannot therefore be covered. Important investments, especially in the area of ​​climate -friendly infrastructure, must therefore be ensured by surpluses in the current area.

Thomas Weninger, General Secretary of the Austrian Association of City, emphasized that for future negotiations with the new federal government, the financability of local services and the ability to invest in climate -friendly infrastructure must be secured in order to maintain the services provided and to avoid financial penalties.

For the financial equalization 2024, additional funds are intended for health and social benefits, which is considered as a step in the right direction. Nevertheless, the municipalities face considerable challenges that cannot be overcome without fundamental reforms of the financial framework. Efficiency increases, for example through property tax reform, are urgently required to ensure the future of the municipalities in Austria.

More information about developments in municipal finance can be found on the websites of [ots] (https://www.ots.at/presseaus-sung/ots_20250623/fpoe-rabllinder-finanz equalization-in-oesterreich-versta-Structural-der-der-der-der-der-der-der-der-der-der-der-der-der- der- KDZ, and [business messages] (https://wirtschafts-nachrichten. be read.