Local authorities at breaking point: Leipzig’s finance councillor speaks plainly today

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There’s a demonstration today. Today, someone who doesn’t usually take to the streets is demonstrating: the city of Leipzig itself. Just like hundreds of other local authorities across Germany, which are being brought to their knees by the mandatory tasks imposed by the federal government and are sliding ever deeper into debt. ‘Local authorities at breaking point’ – Leipzig, too, will be taking part in the nationwide campaign by towns and municipalities today, Monday 22 June, to highlight the disastrous financial situation facing local authorities in Germany.

Of course, the town hall staff will not be taking to the streets themselves. Instead, in numerous local government offices, posters and leaflets will be used to highlight that the city has its back against the wall financially, faced with spiralling social welfare costs on the one hand and plummeting tax revenues on the other.

In Leipzig alone, the funding required for social services has risen by 256 to a total of 634 million euros since 2020. Whilst a net budget surplus of 50 million euros was still achieved in 2020, the city is projecting a deficit of 279 million euros for 2025. This figure has caused the city’s debt levels to rise. And this trend is set to continue unabated in 2026 and 2027. The city can now only fund investments by taking on new debt.

The city has already introduced comprehensive cost-cutting measures as part of the 2025/26 two-year budget; the consolidation plan envisages savings of at least 100 million euros in day-to-day operations alone by 2027. Furthermore, numerous investment projects have been reviewed, postponed or shelved in order to limit borrowing and safeguard the city’s financial viability. But that is not enough. Unless the federal government changes its practice of shifting costs, German local authorities will slide into insolvency one after the other.

Five to twelve in Markkleeberg

The spectre of debt is also haunting Markkleeberg. In Markkleeberg, several mayors from the Leipzig district will gather in front of the town hall at 1 pm. Together, they will hold up round clocks with their hands set to just before twelve.

“These clocks show that time is running out for reliable funding for towns and municipalities,” says Markkleeberg’s mayor, Karsten Schütze, who is also chairman of the Leipzig district association of the Saxon Association of Towns and Municipalities (SSG). The three leading municipal umbrella organisations at federal level – namely the German Association of Towns and Municipalities (DStGB), the German Association of Cities and the German Association of Districts – had agreed on this day of action.

The event in Markkleeberg is thus one of many taking place across the country. The aim of the ‘Local Authorities at Their Limit’ day of action is to highlight the financial situation of towns and municipalities through a Germany-wide campaign featuring local initiatives, and to make it clear to citizens which local services and provision are under threat due to a lack of funding.

According to the SSG, from a Saxon perspective, the focus is particularly on federal policy, whose social legislation has led to a massive increase in local authority expenditure without there being sufficient compensation mechanisms in place. In the Free State of Saxony, high-level talks with the Finance Minister on future municipal financial equalisation recently resulted in a compromise – within the limited scope available – which, whilst not eliminating municipal deficits, it does at least give the local authorities some breathing space over the next two years to carry out the necessary far-reaching reforms – and greater scope for borrowing.

Will city councillors soon be financially sidelined?

The fact that the financial strain on local authorities will also make voluntary work on city councils impossible is now also being recognised by the Left Party group in Leipzig.

Franziska Riekewald, Beate Ehms and Sören Pellmann, executive committee members of the Left Party faction on Leipzig City Council, comment: “For years, local authorities have been trying to make their voices heard – unfortunately, their pleas are barely reaching the federal government. Our city, too, has long since been unable to draw on financial reserves. Savings must be made in every possible area – the 2027/2028 biennial budget is set to bring massive cuts to Leipzig. At least 100 million euros must be saved by 2027. This means that planned projects will be postponed or scrapped altogether, staff numbers will be cut and services for local residents will be axed. The citizens of our city are already noticing that money is tight in the city coffers.”

Whilst social welfare costs are rising dramatically and tax revenues are being deliberately reduced through tax relief for the higher income brackets, the federal government and the state are blithely shifting more and more of the burden onto local authorities – without, however, fulfilling their constitutional obligation to provide financial compensation, the Left Party parliamentary group criticises. The result: infrastructure is crumbling, projects are on the brink of collapse, and the housing crisis and poverty are worsening.

“There is simply not enough money available for an education for children and young people that meets their needs. Future generations will be paying the price for this short-sighted policy for decades to come. Instead, a shift in thinking towards a wealth tax and a fair inheritance tax would be appropriate,” say Franziska Riekewald, Beate Ehms and Sören Pellmann, addressing the urgently needed tax reform.

“These imbalances pave the way for regressive forces and anti-democratic sentiment. We feel the full force of this at a local level. Yet, particularly in the times of crisis in which we live, it is essential to strengthen the structures built up over many years and not to leave those in need of support out in the cold. When spaces for dialogue disappear, when basic needs become unaffordable, when your bank account is empty at the end of the month despite working full-time, urban communities will drift further apart.

As the Left, we therefore call on the federal and state governments to finally fulfil their responsibilities, to stop passing tasks down from the top to local authorities without providing funding, and above all – to take this nationwide cry for help seriously!”

So how is the city of Leipzig ‘demonstrating’ today? At 10 am, Torsten Bonew, the city’s finance councillor, will explain the city’s financial situation to the press on the market square in front of the Old Town Hall. And at 2.00 pm, Dr Skadi Jennicke, Mayor and Councillor for Culture, will host a high-profile event in the foyer of the City Library (Wilhelm-Leuschner-Platz 10–11).