The reason for this is that the city's revenue situation has deteriorated significantly compared to previous years and some key figures have not yet been fully clarified. However, trends are now discernible that allow the administration to submit a draft of the 2024 budget to the committees. This will be discussed for the first time at the main committee meeting on March 6, 2024.
The original draft budget showed a deficit between incoming and outgoing payments of around 68 million euros in the financial budget. "The development of the municipality's liquidity can be seen in the financial budget," explains Lord Mayor Frank Frühauf. One of the reasons for this high cash shortfall is the significant decline in income from trade tax, while at the same time, the apportionment obligations remain high due to the increased tax capacity of previous years. This development already made it necessary to prepare a supplementary budget in 2023, but the figures for 2024 had to be revised downwards again.
The deficit in the financial budget can probably no longer be balanced from existing reserves. "Due to this development, we have to take countermeasures this year in order to secure the city's financial future," emphasizes Mayor Frühauf. First of all, this means that all expenditure has been reviewed and reduced to a minimum. "A further reduction on the expenditure side is hardly possible," says Frühauf. The next step is therefore to consider an increase in revenue, with a focus on the level of local tax rates. These were significantly reduced in 2022 due to the high surpluses from trade tax and have since been 310 percentage points for trade tax (previously 420), 250 percentage points for property tax A (340) and 290 percentage points for property tax B (535).
"Lowering the rates of assessment even below the levelling rates of the state was the right step at the time," emphasizes Lord Mayor Frühauf. The council and administration agreed that it was sensible and necessary to ease the burden on citizens and businesses. "However, we also emphasized that this is of course only possible as long as the corresponding revenue is available," says Frühauf. As this was no longer the case, the council and administration would have to consider adjusting the collection rate. "As the administration, we have the task of drawing up a budget that can be approved, taking into account the long-term ability to pay in subsequent years." In order to achieve this, the current draft of the 2024 budget is calculated using the collection rates that applied before 2022. The financial shortfall of around 56.8 million euros that will then still exist can be covered by the existing financial reserves. "However, it is up to the city council to decide what level the collection rates will ultimately be adjusted to," says Frühauf.
The mayor also expects that one question will definitely be asked in the discussion about the municipal budget: Where has the money from the high trade tax revenues of previous years gone? "The first thing to note is that the city was only allowed to keep a relatively small portion of this income for itself." This is because the city of Idar-Oberstein had to pay a considerable amount of this to the district of Birkenfeld and the state of Rhineland-Palatinate as part of the municipal financial equalization scheme. "We calculated this for the years 2021 to 2024," explains Frühauf. In these four years, the city generated a total of around 503.5 million euros in trade tax revenue. Of this, almost 219 million euros had to be transferred to the district as well as around 43.5 million euros in financial equalization contributions and around 49.5 million euros in trade tax contributions to the state; a total of almost 312 million euros. Of the 503.5 million euros, "only" 191.5 million, or around 38 percent, remained with the city. Of this, debts amounting to 133 million euros were repaid and 55 million euros were transferred to the pension fund in order to relieve subsequent budgets each year. "As a result, the city is currently largely debt-free and stands on its own two feet financially. And of course we don't want to fall back into the previous debt spiral. That is why the council and administration must establish financial framework conditions this year in order to avoid this," concludes Mayor Frühauf.