Budget emergency for the city of Jena confirmed

The City of Jena announced today that the Thuringian State Administration Office has confirmed that the city is in a budgetary emergency. Accordingly, the city of Jena is obliged to submit a budget security concept. This means that the city must set out what measures will be taken over a maximum period of ten years in order to return to a balanced budget.

Benjamin Koppe, Head of Finance for the City of Jena, says: "Municipal budgets are in dire straits due to the effects of the coronavirus pandemic. In Jena, too, important revenues have been lost, so that the gap to a balanced budget has become too large. With the budget protection concept, we are obliged to make savings, but we also see an opportunity here to achieve a sustainable budget that puts Jena on a solid footing for the future."

Martin Berger, Head of Budget and Controlling, explains: "When it comes to budget and financial planning, we always take a long-term view of the development of our city. The same principle is behind a budget protection concept. We have formed a project team that meets weekly and develops proposals for savings. Politicians are closely involved through a steering group in which all city council groups are represented. We have to make savings in the short term in order to achieve long-term growth for the city."

Dr. Margret Franz, Chairwoman of the Finance Committee, says: "In the City Council and in the political committees, we will closely monitor the upcoming process of savings decisions. It is important to us that we take a balanced approach and do not allow successful and established institutions and associations as well as forward-looking city council decisions to fall victim to the red pencil. Responsible sensitivity is required from everyone involved here."

Lord Mayor Dr. Thomas Nitzsche: "Jena must make savings. But that does not mean that we will stand still and nothing will develop for the city. We need to safeguard mandatory municipal tasks and maintain a high level of voluntary services. Furthermore, important future projects that secure the city's long-term growth must also be possible despite the budget protection concept. We are keeping a close eye on our growth target for the city - the 2030 scenario."

Longer-lasting tax revenue expected

There has already been a significant decline in tax revenue since 2019, to which the city of Jena has responded with a budget freeze. The severe effects of the coronavirus pandemic have further exacerbated the financial situation drastically. The results of the tax estimates and the planned state and federal grants are now available. It is clear that revenue shortfalls are to be expected for some time to come. A balanced budget for the years 2021 to 2025 is not possible.

According to the current planning status, deficits of EUR 30 million are to be expected in 2021 and 2022, followed by annual deficits of around EUR 20 million. This means that the balance sheet reserves would be exhausted in 2023 and liquidity would already be exhausted in 2022.

The city council must adopt the budget protection concept in order to obtain approval of the 2021 budget from the state administration office.