Municipal Umbrella Associations Warn of Exploding Debt Mountains and Call on Federal and State Governments to Act

County Association President Achim Brötel said in Berlin that the situation was "dramatisch." He warned: "Wir dürfen uns nicht an schlechten Zahlen gewöhnen. Wenn Gebäude und Straßen anfangen zu bröckeln, dann bröckelt auch das Vertrauen der Menschen in die Handlungsfähigkeit des Staates." If the trend continued, the debt mountains of the municipalities would "regelrecht explodieren."

City Association: "With Backs to the Wall"

Brötel also emphasized that "sämtliche finanzielle Reserven aufgebraucht" were. The reserves of many municipalities were completely exhausted, meaning that no financial buffer existed anymore to cushion unforeseen burdens. As a result, cities, counties, and municipalities lacked any room for maneuver to respond to economic fluctuations or rising social spending.

Claudia Kalisch, Vice President of the German Association of Cities and Mayor of Lüneburg, told NDR Info that the municipalities "stehen mit dem Rücken zur Wand." The financial deficit of cities and municipalities was "riesig." The federal and state governments "müssten endlich reagieren," she demanded. More and more German cities were writing red numbers.

Demand for the "Konnexitätsprinzip" (Cost-Causation Principle)

The municipal umbrella associations are warning against further cuts and are calling for a fundamental reform of municipal finances. On the agenda is, among other things, the principle of "Veranlassungskonnexität" — the "wer bestellt, der bezahlt" (whoever orders, pays) principle. Under this, the level of government that initiates a task should bear the costs in the future. Until now, municipalities have often borne the burden of decisions made at the federal or state level.

The background is a gap between tasks and funding that has been growing for years. The municipal umbrella associations pointed out that many municipalities in Rhineland-Palatinate, as well as nationwide, were at the limit of their capacity to act. A rapid evaluation of the municipal financial equalization scheme (KFA) and a reform of municipal financing are unavoidable in light of massively rising social costs.

Federal Chancellor Friedrich Merz (CDU) announced that the social programs for child maintenance advance payments, youth welfare assistance, and integration assistance for people with disabilities would be reviewed. This was an indirect response to the demands of the municipalities, which complain about disproportionate burdens, particularly in social spending. However, a final positioning is still pending.

Federal-State Meeting as a Possible Opportunity for Reform

On Thursday, the Minister-Presidents of the Länder were scheduled to meet with Federal Chancellor Friedrich Merz in Berlin. In the assessment of the associations, this meeting could initiate a comprehensive financial reform, including a clear regulation on the cost-causation principle. The municipal umbrella associations urgently appealed for this opportunity to be seized.

As the County Association announced, the day of action "Kommunen am Limit" is being supported by numerous cities, counties, and municipalities throughout the federal territory. Through rallies, actions, and public statements, the aim is to draw attention to the precarious financial situation of the municipalities and to build political pressure on the federal and state governments.

Example of Pirmasens: Million-Euro Deficits and Legacy Debts

A spokesperson for the city of Pirmasens illustrated the concrete effects: "Jeder Euro, der für Defizite, Altschulden und steigende Pflichtausgaben aufgewendet werden muss, fehlt für Investitionen in Bildung, Infrastruktur und Stadtentwicklung." Pirmasens has revenues of 205.2 million euros and expenditures of 225.2 million euros in the current budget, resulting in a deficit of just under 20 million euros. The city's legacy debts amount to around 60 million euros, and investment loans to about 76 million euros.

To fulfill its tasks, Pirmasens must take on additional liquidity loans of around 18 million euros. The city's total liquidity loans thus add up to approximately 87.5 million euros. Pirmasens has been a member of the alliance "Für die Würde unserer Städte" (For the Dignity of Our Cities), which advocates for better financial resources for municipalities, since 2009.

The city of Pirmasens is also suing on behalf of Rhineland-Palatinate municipalities before the Administrative Court of Neustadt an der Weinstraße against the municipal financial equalization notices of the state for the years 2024 and 2025. As early as 2019, Pirmasens and the Kaiserslautern district had filed a municipal constitutional complaint with the Federal Constitutional Court. Pirmasens is thus among the pioneers of the municipal financial dispute.

Political Reactions from the Länder

Political pressure is also building within Rhineland-Palatinate itself. The municipal umbrella associations had warned in Mainz that cities, municipalities, and counties were having to take on more and more tasks, while their financial resources had long been insufficient. Rhineland-Palatinate's Minister-President Gordon Schnieder (CDU) assured the municipalities of the state government's support, which should also be reflected in the upcoming double budget for 2027/28. Schnieder emphasized that the federal government could not shirk its responsibility, particularly with regard to social costs in the area of youth welfare.

Dennis Junk, Parliamentary Managing Director of the CDU state parliamentary group, declared: "Wenn unsere Kommunen den Alarmzustand ‚Zwei vor Zwölf‘ ausrufen, ducken wir uns in Mainz nicht weg, sondern stellen uns der Verantwortung." Katrin Eder, the Greens' parliamentary group leader, spoke out in favor of a swift supplementary budget. Rhineland-Palatinate's most recent supplementary budget totaled 600 million euros over two years.

Frank Senger, deputy parliamentary group leader of the AfD in the Rhineland-Palatinate state parliament, sees the largest deficits in the social budget and is calling for new regulations in this area. The Greens are also advocating for a municipal and administrative reform that bundles administrative tasks, makes structures more efficient, and strengthens performance capacity at the local level.

Infrastructure and Municipal Utilities Under Pressure

The financial situation of municipalities also has direct effects on local infrastructure. The Association of Municipal Enterprises (VKU), which represents municipal utilities and operations in the areas of energy, water and wastewater, waste management, and telecommunications, warned that extensive investments were necessary to maintain and modernize the infrastructure of municipal enterprises. However, the money required for this was lacking in municipal budgets — as were funds for road repairs and school buildings.

The warnings of the municipal umbrella associations come at a time of growing public attention to the financial situation of cities and municipalities. The news was broadcast on Deutschlandfunk on 22.06.2026, reported by dpa-AFX from Berlin. The message of the three associations is clear: without a fundamental reform of municipal finances and a clear cost distribution among the federal government, the Länder, and municipalities, the situation will worsen further in the coming years — with serious consequences for public services of general interest and for citizens' trust in the government's ability to act.

With the day of action "Kommunen am Limit," the municipal umbrella associations have increased the pressure on political decision-makers. The upcoming Minister-Presidents' Conference with Federal Chancellor Merz in Berlin is considered the first test of whether the federal and state governments are willing to seriously address the financial plight of the municipalities — or whether the associations' warnings will fade into the political background.