Leipzig’s Tight Budget: Saving and Skimping Amidst Strict State Management

Leipzig saves and skimps. Also because a strict state management oversees every budget and warns with every approval and warns of expenses that would blow up the apparently tight budget. And this mood then usually dominates until the next budget debate, even if the finance mayor occasionally presents balance sheets that say something completely different.

That’s what happened for two budget years, in which everyone expected Leipzig to make a real minus – keyword: Corona years. In the budget debate, it was even speculated that the city’s debt would literally explode and push the debt level to over 1 billion euros.

None of that happened. Also because Leipzig is strictly managed and hasn’t afforded anything that could easily be regarded as a luxury. In fact, the financial leeway in the trade fair city is much greater than the tightly calculated double budgets would suggest.

Poor gray mouse

This is also a political issue, because it is precisely this mood that Leipzig would have to skimp on that is used in the city council, above all by the conservative factions, to constantly accuse the factions of the SPD, Left and Greens of spending too much money. Or then to refer reproachfully to the apparently opulent tax payments of the two big car companies, which apparently saved Leipzig from going into debt again last year.

But these arguments are also untenable.

This is now made clear by a new annual financial statement from the finance mayor – the annual financial statement of the city of Leipzig as of December 31, 2020. You read that correctly: 2020, the first Corona year. That’s how long it takes for Leipzig to actually get approved annual accounts – a full two years. Before that, there is only an informative “provisional annual financial statement”, which gives an idea of ​​what the bottom line will actually be in the end.

Or more. Because the more accounts are checked and booked in the finance department, the more specific the number becomes. A quarter of a year after the end of the year there is usually the first provisional annual financial statement, a year later one that is then already much more reliable.

The approved annual financial statements for Leipzig 2020.

But right away one can say: The Corona years were not at all the debt tour for Leipzig that a lot of people feared after the first restrictions in spring 2020. Also because there were important compensation payments from the federal and state governments, which primarily compensated for the additional costs.

As a result, Leipzig took in 2.015 billion euros and spent 1.96 billion euros. In addition, there was a plus from extraordinary income of 112 million euros, so that the trade fair city closed the crisis year 2020 with an overall result of 163 million euros.

Plus in 2021 too

And there are signs of something similar for the second Corona year 2021. Here, the finance department has at least reported a provisional financial statement of this kind: “With the ‘Preliminary Annual Financial Statement 2021’, the Finance Department provides information on the budget situation in the city of Leipzig as of December 31, 2021. According to current projections, it is estimated that a surplus of EUR 144.7 million in the profit budget and a surplus of EUR 9.5 million in the financial budget can be expected for 2021.”

The finance department has now also presented the first, still very preliminary annual financial statements for 2022. But the department is still very vague about this: “With the ‘preliminary annual financial statements 2022’, the finance department is providing information on the budget situation in the city of Leipzig as of December 31, 2022 . According to current projections, it is estimated that a deficit of EUR 99.3 million is to be expected in the earnings budget and a deficit of EUR 61.1 million in the financial budget for 2022.”

The first preliminary annual accounts for Leipzig 2022.

Of course, this deficit is not visible in the preliminary income statement, because the 99 million euros contain a lot of items that the department is still expecting and can only estimate vaguely.

In real terms, the profit budget is only down by 5 million euros – Leipzig has taken in 2.129 billion euros and spent 2.134 billion euros.

The year was planned by the city council’s budget resolution with a minus of 106 million euros. Since a number of bills are still outstanding, the finance department expects a minus of 99 million euros in the end.

But there are also provisions of 95 million euros and possibly higher personnel expenses of 33 million euros. The next preliminary annual statement for 2022 will only show what will really make a difference.

So far, none of this has had any effect on the city’s debt level, which has only increased by 3.3 million euros – from 461.5 to 464.8 million euros. However, since the number of inhabitants rose by 15,000 in 2022, the per capita debt even fell from 767 to 758 euros.