Bonn Thanks to booming trade taxes, Bonn closes the fiscal year of 2018 with a surplus of ten million euros. The debate about how the money should be allocated begins.
2018 is the second year in a row that Bonn has surprisingly ended with a budget surplus. In the annual financial statement, which the finance department will present to the city council on Thursday, a surplus of 10.3 million euros has been achieved - although a deficit of 63 million euros was planned.
By 2017, the financial situation had already developed much better than the administration had forecast. Treasurer Margarete Heidler explained the City of Bonn suddenly has surplus of 59 million euros at the time being due to a strong economy and one-off effects. Now a debate about the future budget policy of the city begins.
The increase last year is mainly due to the booming business taxes. The administration had planned revenues of 207 million euros, but in fact 272 million euros flowed into the city treasury. The budget for 2017/2018 was drawn up by the finance department in 2016. "The positive framework data of a growing economy were assumed and tax revenues were predicted on the basis of the growth rates of the Tax Estimation Working Group," says deputy city spokesman Marc Hoffmann. "The extraordinarily positive development of trade taxes was not foreseeable at that time."
New deficit expected for current year
One-off factors also contributed to the good result. Trade tax, one of the municipalities' most important sources of income, is particularly susceptible to fluctuations. Other positive factors in the previous year according to the press office: higher proceeds from property sales, lower expenses for social assistance, reduced allocation to the Landschaftsverband Rheinland (LVR), low interest rates.
For the current year, however, treasurer Heidler expects deficits again. Based on the May tax estimate, she anticipates that instead of the planned 251 million, only around 246 million euros will be generated from business taxes. The forecast for the total budget of 1.3 billion euros is an annual loss of 57 million euros. The city administration consequently sees no reason to relax the previous consolidation course. It points to the debt level of 1.78 billion euros, which corresponds to a per capita debt of 5,500 euros.
Local political parties reacted to the news, with the ruling coalition saying there is no reason to give an all-clear. "There can be no question of relaxing the budget," stresses FDP faction leader Werner Hümmrich. "The coalition is taking a cautious approach to planning. This has nothing to do with pessimism, but shows responsible action.”
Klaus-Peter Gilles, parliamentary party leader of the CDU, also confirmed that it could not be about additional expenditures, but only about debt reduction: "We are obliged to continue to be economical with the money of the citizens of Bonn". For Peter Finger, this also affects the future viability of the city. The Greens' financial policy spokesman said that the course of the past years had been the right one. "The results show that a balanced budget in 2021 is realistically achievable. This is the "prerequisite for successfully mastering the major challenges we face, such as climate change”.
Orig. text: Andreas Baumann