Potsdam warns: municipalities are struggling with record financing deficits!

Potsdam warns: municipalities are struggling with record financing deficits!

There was a lot going on in Potsdam today because the city supported the appeal from the state capitals of the 13 federal states. This initiative is aimed at Chancellor Friedrich Merz (CDU) and the state governments. The capitals are calling for a rethink in the municipal financing landscape Daily Mirror reported.

The background to the demands are profound structural problems in municipal financing. In particular, it is pointed out that tasks are often transferred to the municipalities without adequate financial compensation. According to 2024 figures, the municipal funding deficit is an astonishing 24.5 billion euros, the highest level since 1990.

Urgent need for action

Another sticking point is connectivity, which so far only applies at the state level. There is no corresponding financial compensation for federal tasks, which exacerbates the problems. The gap between municipal income and expenditure is becoming increasingly larger, and this affects not only everyday tasks, but also essential areas such as hospital operations and the Deutschlandticket, which also suffer from municipal underfinancing.

At a joint press conference, the representatives of the state capitals, supported by the existing positions of the German Association of Cities and other municipal associations, formulated clear demands on politicians: “We urgently need measures to reorganize municipal financing,” was one of the statements.

The example of Bunning

While the focus here is on municipal finances, a look at Australia shows how a company like Bunnings Group Limited, which has made a name for itself in the DIY hardware and garden center sectors, is doing a good business. Bunnings was founded in 1886 and is now an important player in the market. With a market share of 68% in the Australian DIY market and over 53,000 employees, this also shows how important a solid financing framework is in order to be able to grow. Whether there is a need to restructure - Bunnings, which despite challenges such as the COVID-19 pandemic, successfully expanded its services and adapted them to the new reality - is also familiar with this, as are many companies that have to manage to make ends meet financially.

Use technological innovations

Another example of innovative approaches comes from the tech sector. Speedtest CLI, an official application from Ookla®, is designed to measure the performance metrics of Internet connections. It shows how important it is for communities and companies to always keep an eye on the quality of their internet connections. Especially with regard to home office and digital services, it is crucial that the infrastructure meets the requirements. The application not only supports complicated measurements, but also offers the option of analyzing trends over time.

Overall, it is clear that there is a great need for action in both the municipal and private sector. Be it through a fairer distribution of financial resources or through the use of modern technologies to work more efficiently - the course must be set now so that positive developments are also possible in the future.