Merz, State Premiers Back Funding for New Municipal Mandates as Local Debt Tops €200 Billion
Updated
Updated · DW (English) · Jul 12
Merz, State Premiers Back Funding for New Municipal Mandates as Local Debt Tops €200 Billion
1 articles · Updated · DW (English) · Jul 12
Summary
September 1 is the start date for a new rule under which federal and state governments will have to fund any new duties they impose on municipalities, Chancellor Friedrich Merz said after agreeing the change with state premiers.
€200 billion in existing local debt and nearly €30 billion in new borrowing in 2025 pushed Berlin and the states to act, as municipalities say unfunded mandates and a seven-year economic slump have crushed revenues.
Oberhausen shows the strain: the city ran a roughly €100 million gap on a €1.2 billion budget and still had €800 million in debt at end-2025 even after a North Rhine-Westphalia bailout.
50% of Oberhausen's spending goes to social services, with rising youth welfare, long-term care and housing costs forcing cuts to culture, a 50% parking-fee increase and plans to eliminate 5% of city jobs.
Mayors say the deal helps only future laws, leaving current obligations intact and adding pressure for broader fixes such as a larger municipal tax share and full debt relief.