Across Germany, towns, districts and local authorities are today taking part in the ‘Local Authorities at Their Limit’ day of action to draw attention to the dire financial situation at local government level. The umbrella organisations representing local authorities – the German Association of Cities, the German Association of Districts and the German Association of Towns and Municipalities – have jointly called for this day of action and are demanding decisive measures from the federal and state governments to stabilise local authority finances.
The financial situation of towns, districts and local authorities has steadily worsened in recent years. Nationwide, the local government deficit stood at around 30 billion euros in 2025, reaching an all-time high. The main causes are steadily rising social expenditure, as well as numerous responsibilities and statutory requirements that are being transferred from the federal and state governments to the local level. However, the funding required for this often falls short of the actual costs incurred.
The Märkisch-Oderland district, too, faces considerable financial challenges. According to the budget plan for the 2026 financial year, a total deficit of around €165 million is expected in the operating budget for the financial years 2026 to 2029.
The 18 towns, municipalities and administrative districts within the district are also affected by this development. Rising statutory expenditure and insufficient funding are increasingly restricting the local authorities’ scope for action. Yet it is precisely these local authorities that shape community life through their voluntary services. Cultural and sporting activities, support for clubs and associations, youth work, community centres, events and numerous other projects strengthen social cohesion and make the towns and villages in the district places worth living in.
In order to safeguard its financial capacity to act, the district is already being forced to implement extensive consolidation measures. These include, amongst other things:
- Staff cuts or the reduction of posts within the district administration, insofar as this is organisationally feasible
- Cost savings on discretionary services
- Postponement or reduction of planned investments
Deferral of building maintenance measures.
District Administrator Gernot Schmidt explains: “The local government financial crisis is the result of a trend we have been observing for years. More and more tasks are being decided upon, ever higher standards demanded and ever new services promised, without the necessary funding being secured in the long term. At the same time, we are witnessing a societal trend in which prosperity is increasingly taken for granted, whilst the willingness to work together to create and maintain the conditions for this prosperity is declining. In many places, work ethic, a willingness to perform and personal responsibility are coming under pressure.
If political and social actors continue on this course, they will jeopardise the financial capacity of our state and its local authorities to act. The consequences will not remain abstract, but will be felt directly in schools, on roads, in cultural provision, at sports facilities, in local public transport and in social services.
At the same time, I am convinced that we can reverse this trend. Germany has strong local authorities, committed citizens and efficient businesses. However, this requires an honest debate on priorities, financial responsibility and the consistent application of the principle that whoever delegates tasks must also fund them. The federal and state governments must take action to ensure that local authorities can reliably fulfil their duties and safeguard liveable communities for the future.”
The local authorities and their umbrella organisations are therefore calling on the federal and state governments to:
- The local authority deficit must be fully offset – for example, through emergency aid, higher shares of tax revenue and reforms to social security systems.
- Every new responsibility must be fully funded (“Whoever assigns the task must also pay for it”).
- Standards and statutory requirements must remain financially viable.
- The ability of local authorities to act and their self-governance must be safeguarded.
The local government financial crisis is no longer merely an abstract challenge. It determines whether towns, municipalities and districts can continue to fulfil their responsibilities and provide citizens with effective public services. The federal and state governments therefore have a responsibility to provide the local authorities with sufficient funding to ensure they remain a reliable partner at a local level in the future.