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MIL OSI Translation. Region: Germany / Deutschland –

Source: Destatis Federal Statistical Office

Loss of income due to the corona crisis leads to a large financing gap

Press release No. 385 from October 1, 2020

WIESBADEN – The Municipalities and Community associations (excluding city states) had a funding deficit of 9.7 billion euros in the first half of 2020. In the first half of 2019 the deficit was just under 0.3 billion euros. As the Federal Statistical Office (Destatis) reports on the basis of the quarterly cash statistics, the strong revenue shortfalls of the municipalities as a result of the corona pandemic in the 2nd quarter of 2020 were decisive for this development. The result is made up of communal Core- and Extra households together: The deficit of the core budgets in the 1st half of 2020 was 9.5 billion euros compared to 0.9 billion euros in the 1st half of 2019. The extra households had a funding deficit of around 0.2 billion euros in the reporting period Compared to a surplus of around 0.7 billion euros in the same period last year.

Significant decline in business tax income

In the first half of 2020, the total adjusted income of the municipalities decreased by 1.1% or 1.5 billion euros to 127.4 billion euros compared to the first half of 2019. Tax revenues were 10.6% lower and amounted to 39.6 billion euros (-4.7 billion euros). The reason for this was the decline in trade tax income (net) by 21.3% to 19.1 billion euros (-5.2 billion euros). The decline in income from administration and user fees by 8.8% to 14.9 billion euros (-1.4 billion euros) was due to the closure of municipal facilities in the 2nd quarter of 2020. To compensate for this, the federal states increased the key allocations by 14.1% to 24.8 billion euros (+3.1 billion euros), the earmarked allocations by 11.7% to 12.6 billion euros (+1.3 billion euros) and investment allocations even increased by 28.9% to 4.2 billion euros (+0.9 billion euros).

In particular, the 2nd quarter of 2020, which was shaped by the Corona crisis, brought enormous revenue shortfalls for the municipalities: Income from trade tax (net) in the 2nd quarter of 2020 was around 4.5 billion euros compared to the 2nd quarter of 2019 dropped to 7.0 billion euros. Due to the temporary closure of numerous municipal facilities, the administration and user fees also fell by 1.4 billion euros to 7.1 billion euros. The early payment of key allocations from the federal states to the municipalities (+2.7 billion euros) and earmarked allocations (+1.1 billion euros) prevented the municipal budgets from falling even more sharply in the 2nd quarter of 2020. The federal stimulus package with the included The “communal solidarity pact” contained in the “municipal solidarity pact” to compensate for the loss of trade tax will only take effect in the second half of 2020.

Spending on capital investments increased sharply, social benefits almost unchanged

The expenditures of the municipalities and municipal associations increased in the first half of 2020 compared to the first half of 2019 by 6.2% or 8.0 billion euros to 137.1 billion euros. Expenditures for capital investments rose particularly sharply by 16.0% to 16.3 billion euros (+2.2 billion euros). At 11.7 billion euros, construction measures accounted for the largest part of capital expenditure (+17.2% or 1.7 billion euros). Capital investments also include the purchase of equipment, for which, at 2.1 billion euros, 5.7% more was spent (+0.1 billion euros). The proportion of medical equipment that is invested in investments, such as beds for intensive care units, which were specially acquired because of the corona pandemic, cannot be shown separately. Current operating expenses rose by 2.9% to EUR 31.3 billion (+ EUR 0.9 billion). This also includes the purchase of non-investment devices and equipment for 0.9 billion euros, which was 14.1% higher than in the same period of the previous year (+0.1 billion euros) – this includes medical devices and laboratory equipment.

The increase in personnel expenses by 4.7% or 1.6 billion euros to 35.3 billion euros in the first half of 2020 was largely due to the wages of employees with collective agreements. Here, 1.2 billion euros more was paid in salaries and social security contributions than in the first half of 2019.

Social benefits amounted to 30.3 billion euros and remained stable compared to the first half of 2019 (+ 0.4% or 120 million euros). This included the benefits of the new Ninth Book of the Social Security Code (SGB IX) for the integration of people with disabilities (6.7 billion euros). Previously, similar integration benefits for people with disabilities were regulated in social assistance (SGB XII). As a result, social assistance benefits (SGB XII) fell from 15.6 billion euros in the first half of 2019 to 8.8 billion euros in the first half of 2020. In summary, the benefits according to SGB IX and SGB XII were EUR 15.4 billion in the first half of 2020, 1.4% or EUR 0.2 billion lower than in the same period of the previous year.

Quarterly cash results Selected key figures from the municipalities / municipal associations core and extra budgets
Income / expenditure type
Germany 1
including core households
1st half of 2019
1st half of 2020
change
1st half of 2019
1st half of 2020
change
Million Euros
in %
Million Euros
in %
Without city-states. Including the balance of the budgetary charges. X = statement does not make sense
Adjusted revenue
128 816.6
127 366.5
-1.1
120 495.7
119 261.2
-1.0
including:
Taxes net
44 282.7
39 567.9
-10.6
44 282.7
39 567.9
-10.6
including:
Trade tax (net)
24 292.7
19 117.1
-21.3
24 292.7
19 117.1
-21.3
Key assignments
21 756.5
24 821.1
14.1
21 756.3
24 821.1
14.1
Allocations and grants for ongoing purposes from the country
11,314.4
12 634.0
11.7
10 140.5
11 116.4
9.6
Administration and user fees
16 311.0
14 882.1
-8.8
10 162.8
9 155.0
-9.9
Allocations for investments from the land
3,283.0
4,231.2
28.9
3,199.3
4,136.4
29.3
Adjusted expenses
129 094.4
137 097.0
6.2
121 410.2
128 795.6
6.1
including:
Personnel expenses
33 678.4
35 268.8
4.7
30 056.9
31,561.0
5.0
Ongoing material expenses
30 389.4
31 273.4
2.9
26 245.3
27 136.5
3.4
Social benefits
30 161.5
30 281.5
0.4
29 956.8
30 107.0
0.5
Interest expenses
1,258.7
1,157.2
-8.1
1,028.2
949.1
-7.7
Capital investments
14 019.3
16 266.1
16.0
12 727.2
14 854.9
16.7
including:
Construction work
9,949.7
11 663.0
17.2
9,495.4
11 056.8
16.4
Financial balance 2
-277.8
-9 730.6
x
-914.5
-9,534.4
x

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MIL OSI

EDITOR’S NOTE: This article is a translation. Apologies should the grammar and / or sentence structure not be perfect.

MIL Translation OSI