Spending Pressure Rising in Municipalities

WIFO Director Christoph Badelt at the Presentation of the Municipal Financial Report
On the occasion of the presentation of the municipal financial report on 12th December 2019, the President of the Association of Austrian Municipalities (Österreichischer Gemeindebund), Alfred Riedl, and WIFO Director Christoph Badelt took a joint look at the financial situation of the municipalities and also named central future fields in which there is a necessary need for investment despite a tighter budget.

"The municipalities without Vienna invested responsibly and with common sense in their communities in 2018. The good economic situation also boosted the income of the municipalities. With 2.745 billion € spent on investments, we continue to be the most important regional investors. However, the increasing pressure to spend on childcare, nursing homes and transfer payments is increasingly challenging us", said Alfred Riedl summing up the financial situation of the municipalities.

Christoph Badelt added that it can be assumed that revenue growth will slow down for all federal, state and local administrations. Where the municipalities are shaping the future, however, stable financing is of particular importance.

"We are at the end of a boom phase and are looking forward to weaker economic growth in the coming years. The main services of general interest at the municipal level should, however, be financed as far as possible independently of the general economic conditions." Badelt emphasised the need for future investments in key areas such as care, childcare and digitisation: "The need and necessity for additional funds in these areas has been adequately documented in numerous WIFO studies."

Against the background of a high tax burden in Austria, however, it would require joint efforts by the federal government, the states and municipalities to make the necessary resources available – for example by making full use of efficiency reserves and by reorganising the distribution and prioritisation of tasks.

Further information (in German) can be found here.