The city of Idar-Oberstein is now planning for an annual surplus of around 100,000 euros and can balance the budget without increasing the real tax rates. Following the preliminary consultation, the city council will make a final decision on the supplementary budget on July 19, 2023.
Due to the current adjustments to trade tax prepayments, the city of Idar-Oberstein is expecting a shortfall in income of around EUR 97.4 million compared to the original budget planning. Due to the municipal financial equalization scheme (KFA) of the state of Rhineland-Palatinate, the tax income does not accrue entirely to the city, but must be paid proportionately to the state via the trade tax levy and the financial equalization levy and proportionately to the district via the district levy. As a result of the lower income, the expenses for the trade tax levy and the allocation to the special item for the charges from the KFA are also expected to be reduced by EUR 71 million.
This would have meant a deterioration in the budget of around 26.4 million euros. As the original 2023 budget closed with a planned annual surplus of around 22.5 million euros, this would have left an annual deficit of around 4 million euros. According to the municipal code, the city of Idar-Oberstein is therefore obliged to prepare a supplementary budget for the current financial year in order to avoid a significant deficit.
In the supplementary budget, additional interest income of 1 million euros, additional income from the municipal share of income tax of 630,000 euros and various cost reimbursements and contributions of around 940,000 euros were budgeted on the income side. On the expenses side, personnel expenses were reduced by around EUR 960,000 and expenses for materials and services by EUR 450,000. Furthermore, a reduction in the financial budget of around 8.8 million euros was achieved by reallocating investments to the coming financial years.
As a result of these new estimates in the supplementary budget, the city of Idar-Oberstein is now planning for an annual surplus of around 100,000 euros. This means that the supplementary budget can balance the 2023 budget without increasing the real tax rates. Furthermore, there is still no need for investment or liquidity loans.
The originally planned shortfall in financial resources of around 48.9 million euros is expected to increase to around 122.7 million euros despite the improvements mentioned above. The reason for this is that, due to the KFA, levies must be paid on the revenue received in the previous year, and this - as already mentioned - with reduced revenue in 2023. This financial deficit can be covered by the liquidity reserves available due to the high revenue in the previous year, so that the supplementary budget can be approved from the perspective of the city of Idar-Oberstein.