FAQs on the budget

The general conditions for municipal budgets were and remain extremely difficult - in Erlangen as well as nationwide. In 2025, the deficit of local authorities across Germany amounted to around 25 billion euros, and the trend is rising. For 2026, the German Association of Cities assumes that the municipal deficit will grow to at least 32 billion euros.

In Erlangen, high trade tax repayments from 2024 and declining trade tax income are having a particularly negative impact on the financial situation. As a result, the city is increasingly reliant on so-called cash loans. Added to this are rising personnel and social expenditure as well as continued high construction costs.

Comprehensive savings in expenditure and personnel were already introduced in 2024. The city has developed a far-reaching consolidation concept for 2025, which is being systematically implemented. At the same time, the city is pushing ahead with digitalization in order to make administrative processes more efficient. Mobile working concepts are also helping to achieve savings when renting real estate. Thanks to these consolidation efforts and high key allocations, the budget for both 2026 and the coming year 2027 shows a positive balance from ongoing administrative activities.

Trade tax revenues are subject to regular fluctuations. There are therefore mechanisms in place to compensate for these fluctuations, albeit with a time lag, such as allocations from the federal and state governments. In addition, the city has reduced debt on a large scale in recent years and built up reserves.

However, losses of this magnitude caused by unforeseeable repayments are unusual and can only be offset in the medium term. As a result, the city's reserves were depleted and the city had to work with measures such as a budget freeze for 2024 and cutbacks. A budget consolidation concept had to be drawn up for 2025 in order to stabilize the financial situation.

The companies' advance payments are determined by the tax office and are binding for the municipalities. These payments are usually calculated on the basis of the previous year's assessment or on the basis of the companies' profit expectations, which they submit to the tax office. The city is in regular contact with major trade tax payers in order to be able to make adjustments to the forecasts as quickly as possible.

The slump in trade tax in Erlangen is not due to profound economic problems, such as corporate insolvency. Erlangen remains a stable and attractive business location. The outlook for 2026 shows that the city has the opportunity to gradually work its way out of its financial difficulties through compensation mechanisms and structural adjustments. However, savings efforts will still be necessary.

And: Erlangen has once again maintained its top position in the renowned Prognos Future Atlas 2025. In the nationwide ranking, which examines the future viability of cities and regions, Erlangen is the best rated city. Only the district of Munich is ahead of the Huguenot city. Here: Future made in Erlangen