Communities Complain of Growing Financial Crisis - Saxony’s €1.1 Billion Budget Crisis Threatens Public Services and Growth
Saxony’s local governments grappled with a deepening financial crisis by the end of the third quarter in 2025, with their combined budget deficit surpassing €1.113 billion. Major cities like Dresden, Leipzig, and Chemnitz contributed nearly €591 million to the shortfall, raising concerns over the long-term impact on public services and infrastructure. The financial strain was evident as tax revenues, including business taxes, dropped by €58 million, while personnel costs and social welfare payments increased by €103.5 million and €79 million respectively. Local authorities borrowed an extra €426 million, pushing their total debt to €795 million, and investment spending was cut by €300 million. Bert Wendsche, president of the Saxon Association of Towns and Municipalities, warned that reduced investments could hinder regional economic growth and infrastructure maintenance, urging federal and state governments to implement reforms by 2026. With borrowing rising and key revenue streams shrinking, local governments face tough choices ahead, potentially leading to further cuts in services or infrastructure. Authorities are now seeking higher-level reforms to stabilize finances before the situation worsens.
