Status: 18.11.2023, 18:00 PM
By: Andrea Beschorner
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Despite being in the red, she is quite optimistic about the future: Freising's financial officer Monika Schwind speaks of a dry spell that will not last forever. Photo: Lehmann Lehmann ©
Why is Freising doing so badly financially? This is explained by financial officer Monika Schwind in an interview. And also why social justice is possible in the face of empty coffers.
Freising – The city of Freising is struggling to find a budget that can be approved. Meanwhile, many see the reason for the precarious financial situation in the high investments of recent years – for example, for the redevelopment of the city centre. Freising's financial advisor Monika Schwind (FSM) explains why this is not right in an interview with the FT. And despite all the financial hardship, she is quite optimistic about the future.
Ms. Schwind, how satisfied are you, as financial officer, with the fact that no more budget will be launched this year?
Basically, I am glad that we have dealt very seriously with all the issues, all the expenses and all the income. And I am glad that we are now still deciding for ourselves how we want to draw up the budget. The fact that we are not as fast as usual shows how difficult it is for us to find a balanced solution for everyone. It's better to be in peace, rather not a quick shot. After all, there is a great danger that if we send the budget to the financial supervisory authority too early, we would get it back immediately – and we would not be able to act with an unapproved budget.
Can you briefly outline the reasons for the precarious financial situation?
In the years before Corona, we had very high tax revenues. These were used to expand the infrastructure of the city of Freising – important and correct measures, investments in the future of Freising. Due to the collapse in tax revenues, we lack money in the administrative budget to cover the running costs. This means that salaries for kindergarten teachers, the district levy, insurance contributions, etc. cannot be covered by the income. It is important to note that the massive slump in trade tax revenues was not foreseeable. Due to the corona pandemic, we no longer even have half of the tax revenues of 2018, expect 27 million this year, where we were already at over 60 million in good years. The constant income tax portion of 40 million alone is added to all salaries paid by the city of Freising. The trade tax now is nowhere near even enough for the district levy. And then we need money to equip schools, daycare centers and so on. Financing the administrative budget through loans is not legally permissible, and for good reason. It would be like having to take out a loan to pay your rent. In the private sector, this must also be financed through the salary. On the other hand, long-term investments are not a problem. These can and may be financed through loans.
And what happens if Mayor Tobias Eschenbacher and Treasurer Johannes Hutter present a budget in February and there is no majority?
Of course, if you don't agree, you don't have to agree. The consequences, however, would be fatal. Without a budget, we would then not be able to act – which would mean that many ongoing measures, including those that are urgently needed, would have to be put on hold.
Nevertheless, it is not the case that the city councillors are now being ignored and that the many hours of work that the citizens' representatives have put into the financial plan have been in vain?
No, quite the opposite: on the one hand, due to this massive preparatory work and the intensive study of the budget situation, everyone is aware that we will have to live with cutbacks. However, even after many intensive consultations, it was not possible to save enough, and the deficit is still too high. Now, on the basis of all the intensive preliminary consultations, an attempt is being made to draw up a budget that can be approved despite the deficit.
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Have the city councillors missed the opportunity to turn things around? And when would that have been?
No, we didn't miss anything. No one could have foreseen that trade tax would collapse in such a dramatic way. The economy has collapsed due to Corona and the wars. But this also means that we as a city will quickly feel better again as soon as the economy picks up again and all industries recover. I understand well that people would like to have the one mistake, the one big omission, to be able to say whose fault it is. But that's not possible here.
On social media, it is often said that the city has overextended itself with the redevelopment of the city centre, the western bypass and the like, and that it is itself to blame for the misery. What do you say to these critics?
The city hasn't overextended itself, that's just not true. We started all the projects when there was still enough money. The paradox is that we had heaps of reserves for which we paid a lot of penalty interest. And then came the turnaround in interest rates and inflation. An important point in order to put the whole thing into perspective is the following: If we had not made the investments, we would be in this situation now. The income is not so low because we have redeveloped the city center or built a school. We wouldn't have had less running costs if we hadn't opened the Moosach. Tax revenues have fallen – completely independent of our investments. If we hadn't invested, the income would still not cover our current expenses. Then we would be doubly badly off: we would not have tackled the important infrastructure measures and would still have to save money. It is also important to note that it is just as inadmissible to pay current expenses from reserves as it is to finance the expenses with a loan.
Speaking of revenues, are there any shortcomings on the part of the city? At this point, for example, non-existent commercial properties should be mentioned.
You wouldn't be able to bite down on it in a hurry. But of course, as you can see and feel right now, trade tax is an important source of income, which is why we have to plan strategically for the future in order to continue to acquire trade tax revenue sustainably. Unfortunately, we did not find a political consensus in the city council on this. In this respect, I really hope that some of my colleagues on the committee will change their minds. We have to designate commercial areas.
But it's not just business tax revenues...
Of course, there are also other incomes, such as fees. I hope that in the future all fees will be based on transparently calculated expenses. We must continue on the path we have already taken in music schools, kindergartens and cemeteries. We need to know transparently what something costs and how much the city of Freising can afford in subsidies. We are not passing on the costs one-to-one to the citizens. We also need to communicate this more transparently.
There is a huge outcry about the new subsidy system at sports clubs. Can you relate to that? Was the recalculation necessary?
Yes, I understand that. In good times, we have significantly increased subsidies for children and young people. The fact that this always falls under the table bothers me at this point. But we can only afford to be generous in good years. If we now see to it that we can get through this bad time together without continuing to build up a large deficit, we will have overcome the trough more quickly when revenues rise again and will be able to think about subsidies again. It will not be a permanent state. And regarding the area of sports: We have adjusted the hall fees to the fees of the district. This is also part of the truth.
Where else will people feel the fact that the city of Freising is bankrupt in the future?
The city of Freising is not broke. We still have a lot of assets, but we don't have them at our disposal. Top priority must be given to mandatory tasks in the areas of childcare, schools, security and public order. Everyone in the administration of the city of Freising now has to think about what is absolutely necessary, or rather: what can be done without – up to and including training. Fees will rise, subsidies will decrease. It's about putting everything to the test: replacement purchases of vehicles, for example. Just like in my private life: I don't buy a new kettle in bad times, even though the old one still works. We will also not be able to implement every concept and project that has been decided. Take Marienplatz, for example: it is pushed until we reach the end of the dry spell. Bike paths that can wait, will have to wait. Or road repairs: perhaps the speed limit on some roads is temporarily lowered so that the renovation can wait.
In view of the current budget situation, is it even possible to think through and implement the idea of social justice to the end?
Naturally. After all, social justice does not mean that everything is offered as cheaply as possible for everyone. From this point of view, it is perhaps even conceivable that there will be a very significant increase in fees in some areas. And under certain conditions, the fees are then reduced so that benefits also benefit those who depend on them. Like the Munich model for childcare: Below a certain income limit, parents can apply for a waiver of fees. That's more socially just than providing everyone with a low-cost daycare place. Or in the case of music school, where those who don't mind financially contribute more to the costs than families who have less money at their disposal. Because the cases in which parents say that if they have to pay ten euros more, their child can no longer learn an instrument, they do exist. And we have to relieve them.
Are city councillors setting a good example? Surely the attendance fee could be temporarily reduced – as a symbolic act of solidarity?
In a closed-door meeting of the FSM, we already agreed that cutting the parliamentary group money would be an important signal to the outside world. But so far, nothing has been decided. In my view, it is important that if everyone has to save money, the city councillors also have to make a contribution. Not just a symbolic euro, but a serious contribution.
What exactly would you like to see as a financial officer?
That people understand why it is necessary to cut back now. And the social peace that we have in the city council is what I would like to see for urban society in these difficult times. We have to stick together now.