City council begins budget discussions

Situation exacerbated by high trade tax repayments and lower trade tax forecast

This year's budget consultations are taking place under difficult conditions: Municipal finances throughout Bavaria are under pressure due to rising personnel and social expenditure as well as very high construction costs. Against this backdrop, it is becoming increasingly difficult to draw up budgets that can be approved. In Erlangen, the situation is exacerbated by high trade tax repayments for this year and a lower trade tax forecast for 2025. Nevertheless, the goal is being pursued,

• complete ongoing construction projects
• maintain facilities and structures and
• secure the central tasks of the city administration.

For the 2026 budget, it is foreseeable that the city will have the opportunity to gradually work its way out of the financial imbalance through equalization mechanisms and structural adjustments.

Borrowing of over 45 million planned

As Beugel pointed out when presenting the budget, trade tax revenue for 2025 is set at 130 million euros. Income tax revenue is expected to reach 105 million euros. In terms of property tax, the treasurer is forecasting revenue of 24.6 million euros. After reducing debts by over 75 million euros in the past few years and managing seven years without net new borrowing, new borrowing of over 45 million euros is now planned. Beugel is concerned that, in addition to this new debt, there is still a financial deficit of over 50 million euros. In total, the budget therefore lacks almost 100 million euros in own revenue. Added to this are possible further negative developments such as an increase in the district levy or possible further increases in personnel costs following wage negotiations.

In the current situation, the city is forced to make extensive savings in the current administrative budget, i.e. in material resources and personnel. The material resources available to the departments for mandatory and so-called voluntary municipal services must be reduced. The individual savings measures amounting to 10 million euros are currently being worked out by the specialist departments and will be presented to the specialist committees of the city council in November. Beugel cited the following examples

• a reduced edition of the international figuren.theater.festival and the castle garden concerts
• a reduction in the subsidy for the Deutschlandticket for users of the ErlangenPass or
• an increase in fees, e.g. in the kindergarten sector.

Vacant positions generally remain unfilled for six months

Job creations are limited to the bare essentials, although they are absolutely necessary in schools and daycare centers. However, they are to be financed in full by the transfer of posts, so that the budget submitted does not provide for any additional expenditure in this respect. The City Council has also already decided on a six-month freeze on reappointments. This means that vacant positions will not be filled for six months. At the same time, however, Beugel emphasized that in many offices and areas, standard reductions in citizen services are unavoidable as a result.

Investment volume of around 72 million euros

The investment volume next year will amount to 71.8 million euros. In comparison: 88.4 million euros were budgeted for 2024. According to the medium-term financial plan, a total of over 150 million euros is planned for the years 2026 to 2028. The focus will remain on investments in

• schools
• childcare
• culture and
• the urban infrastructure,

even if individual projects have to be postponed.

Schools and childcare and family facilities

19.1 million has been earmarked in the budget for school renovations, including school facilities. The renovation of the workshop wing of the vocational school and the all-day expansion of the Friedrich Rückert and Michael Poeschke schools remain important projects. Planning can also begin for the expansion of classrooms and specialist teaching rooms at Emmy-Noether-Gymnasium. However, the start of planning for the general refurbishment of the Fridericianum grammar school has been postponed until 2027. The general refurbishment and extension of the Mönauschule elementary school, on the other hand, is not included in the financial plan until 2027. 11.6 million euros will flow into the expansion of childcare and family facilities. Five million euros of this is earmarked for grants to independent providers alone.

Urban infrastructure

14.6 million euros have been earmarked for the expansion of urban infrastructure. Around four million euros have been reserved for the urban-regional railroad and 10.2 million euros for road and bridge construction. However, plans to expand the main fire station are to be put on hold until further notice once the design planning has been completed.

Culture and environment

In the area of culture, 8.5 million euros are budgeted for the general refurbishment of the KuBiC Frankenhof. Investments in the city districts will also continue with the new construction of the Büchenbach community center (6.25 million euros). Planning for the Eltersdorf community center has been halted for 2025, but is set to resume in 2027. Other major investment projects such as the creation of a museum quarter around the city museum will not be pursued for the time being. In the area of sport, FSV Bruck can continue to count on a construction grant of 1.2 million euros. And in the environmental sector, 400,000 euros have been earmarked for PV systems on municipal buildings. In contrast, the "Grants for private energy measures" program has been suspended.

"Will have to present further savings proposals"

Beugel prepared the city council members for the fact that the consolidation process is not yet complete with the draft budget, as the government of Middle Franconia, as the responsible supervisory authority, must also approve the budget. "After considerable efforts in the specialist areas, we are able to present a working status today. We are still in close contact with the government of Middle Franconia and will have to present further savings proposals," said the Head of Finance.

The treasurer's speech is traditionally not discussed by the city councillors when the budget is presented. The budget discussions of the parliamentary groups and committees will follow in the coming weeks and months. The final resolution is planned for the city council meeting on January 16, 2025.

Here: Draft budget 2025
There is also a report in the city newspaper "Rathausplatz 1 - November 2024 issue".