German Municipalities' Budgets Stressed by €1 bn Reserves and Rising Personnel Costs

In Thuringia, municipal governments reported cash reserves of about €875 million for the previous year, which calculations by the Bertelsmann Stiftung suggest now total roughly €1 billion. Left‑wing lawmaker Sascha Bilay criticised the situation, saying that despite these surpluses the municipalities continue to request state assistance and called for a reform of the fiscal equalisation system.

In the Hessian capital Wiesbaden, treasurer Hendrik Schmehl warned that the city could face a €180 million shortfall next year. Personnel expenses have nearly doubled over the past ten years, with staff numbers rising by 1,409 employees. Schmehl argued that further increases are unaffordable and suggested limiting new hires, accelerating staff retirements, and using automation and AI to curb costs.