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Cities face dire finances

DDP/The Local · 2 Feb 2010, 08:06

Published: 02 Feb 2010 08:06 GMT+01:00

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The problem began in earnest during 2009 and is expected to continue through the current year, city authorities told daily Süddeutsche Zeitung on Tuesday.

Communal deficits reached above €4 million in 2009, the paper reported ahead of a national meeting where the finances for 2010 will be discussed. Meanwhile in 2008 cities and municipalities were still in the black.

The main cause of the dire fiscal situation leading to a mountain of debt more than €11 billion was the dramatic reduction in tax revenues, the paper reported, adding that there were fears corporate taxes receipts could drop by more than 10 percent due to the bad economy.

At the same time, social security spending rose by more than €1 billion for cities, with local authorities doling out €40 million for Hartz IV welfare benefits alone.

Story continues below…

German cities have already complained recently that they are bearing the brunt of recent tax cuts passed by Chancellor Angela Merkel’s government. The centre- right coalition pushed through a controversial stimulus package of €8.5 billion in tax relief from January 1, and plans much larger cuts in the coming years.

DDP/The Local (news@thelocal.de)

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Your comments about this article

10:32 February 2, 2010 by Fredfeldman
The debt has nothing to do with taxes and everything to do with the fact that most of western civilization*s money is in Asia and the middle east. All the fuss is just an adjustment to new realities. Our jobs and money have fled - get used to it.
01:22 February 3, 2010 by Logic Guy
Well, you do make some interesting points Fredfeldman.

And the truth is, as the world's 2nd largest exporter, you are very vulnerable to global economic crises. And the fact is, the German government is struggling under the weight of welfare.

It's going to take some very bright individuals to lead the nation out of the deep hole that it's in. And the same is true for America and many other nations. Absolutely, without a

doubt, there must be a new governing philosophy.

Otherwise the world may find itself in something even worse than the Great Depression.
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