Financial crisis in the Ruhr area: Municipalities are heading for budget shortages!

Financial crisis in the Ruhr area: Municipalities are heading for budget shortages!

The regional association Ruhr (RVR) pointed out the alarming financial situation of the cities and municipalities in North Rhine-Westphalia (NRW) in its current “Local Finance Report Ruhr area”. According to the RVR financial analysts, there are fears that many municipalities could develop into a profound financial crisis. The forecasts show that hardly a city or community can set up a balanced budget over the next five years. This was also made by the chairman of the City Day in North Rhine-Westphalia, Thomas Eiskirch, and the President of the City and Municipal Association of North Rhine-Westphalia, Prof. Dr. Christoph Landscheidt, confirms that address the consequences of structural underfunding and elderly debt problems.

In their report, the experts call for an award program and sufficient state funds for budget consolidation. If these are missing, important investments in the infrastructure, such as in traffic projects, digitization as well as the construction and the renovation of schools and kindergartens, are no longer being implemented. The RVR urgently warned that the cities in North Rhine -Westphalia are facing major economic challenges should the necessary political measures not be taken.

concrete consequences in Lünen

The city of Lünen provides a particularly impressive example of the challenges shown. In August 2024, a budget lock was imposed there due to unforeseen additional costs of a total of 6.5 million euros, which had to be taken into account for pension provisions. According to city treasurer Dr. André Jethon aimed at minimizing the annual misalignment for 2024 and protecting the city's equity. The city therefore only allowed necessary expenses , which means that many construction projects and new settings have been paused. However, completions of projects already advertised may be carried out.

The financial problems in Lünen are symptomatic of the overall situation in NRW. Nationwide, the municipalities have a shortfall of 24.9 billion euros on September 30, 2024, of which 6.2 billion euros are omitted on North Rhine-Westphalia alone. These developments show that the reserves of the municipalities are disappearing rapidly and that more and more cities are facing impending over -indebtedness.

debt and structural underfunding

The dramatic situation is reinforced by a survey among the municipalities, which also reveals a growing financial shortage. The answers show that the prospects are judged to be poor by 2028. The municipal social expenditure has achieved a doubling to 24 billion euros since 2009, which underlines that expenses increase faster than the income. The damage caused by the Corona pandemic and the Ukraine War also put a significant impact on the cities' finances with an additional 6.5 billion euros. ice skitching and Landscheidt therefore require improvement in the municipal financial interior Allocations in the municipal financial compensation.

It is clear that the financing situation of the North Rhine-Westphalian cities and municipalities requires an urgent intervention. Otherwise, the municipalities will not be able to cope with their basic tasks and challenges in the future.