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Schonach – The upswing is over – Mayor Jörg Frey regretted this at the meeting of the Schonach local council. He said this when it came to the budget for the coming year. As previously expected, it will not be possible to cover ongoing expenses. After more than ten years of bubbling tax revenues, we now have to tighten our belts, added Frey.
Overall, the signs are bad, short-time work, layoffs and bankruptcies are increasing, and the mood in the country is bad. You probably have to say goodbye to the familiar, also because of the general political situation in the world. The mayor predicted that public authorities would have significant problems financing their budgets. After the new Bundestag elections are scheduled for early 2025, Germany urgently needs a stable government with a clear majority that would stand for clear guidelines.
- Why it looks worse: Treasurer Steffen Dold had the bare figures for the municipal budget ready, and they confirmed Frey’s statements. Despite slightly increasing tax revenue, he expects a deficit of 998,100 euros in the budget. Dold justified this with additional burdens in the municipal financial equalization. The record trade tax revenue of around 3.5 million euros achieved in 2023 will lead to a decline in key allocations of around 492,000 euros while at the same time increasing the financial equalization levy of 44,000 euros. In addition, an increase in the district levy is expected, which is likely to rise by 134,000 euros compared to the previous year. Increased personnel costs and higher losses in the spa business as well as uncertainties regarding the trade tax rate, which in the worst case scenario could even be set too high at just 2.1 million euros, are also in the room. “It would therefore be desirable that cuts could be made to the planned measures in the earnings budget,” warned Steffen Dold.
Despite everything, approved
Although the budget could be approved, the legal supervisory authority, the district office, said that cuts were necessary. According to the initial planning, there will be a deficit of almost one million euros, but this could be completely covered by the earnings reserve, and the cash portion of the deficit of 514,000 euros can also be offset using existing liquidity. Nevertheless, according to Dold, the cash deficit in the earnings budget should be further reduced, primarily through spending cuts.
- What to spend money on: Investments: 4.46 million euros are earmarked in the financial budget, the largest individual measure is the renovation of the old school building, construction costs of around 4 million euros are expected. Around half of this should be paid out by the end of 2024, the rest must be included in the 2025 budget. Grants of around 1.44 million euros are expected, but only 740,000 euros are expected to flow in 2025; the remaining funding is expected to be received in 2026. Schonach will also need 700,000 euros for the storm overflow basins, 500,000 euros for the broadband expansion, 580,000 euros should be made available for outdoor road renovations and 250,000 euros for a possible land purchase.
- Own funds are missing: There are currently no equity funds available for financing; the cash balance must be maintained to cover the expected deficits from the annual results for 2025 and 2026 as well as the loan repayments. The investments should therefore be partially financed through the expected subsidies for the medical center and the storm overflow basin as well as other investment income of 1.27 million euros. There remains a financing requirement of 3.28 million euros, which is to be covered through loans. An extremely large sum. Treasurer Dold noted that the loan amount should be reduced by deleting it. He also admitted that the loan authorizations of 2.22 million euros planned for 2024 were not needed, so the high amount in 2025 is offset by the loss of the authorizations in 2024.
- Water supply is becoming more expensive: A decrease in network maintenance costs was expected for 2024; 50,000 euros were planned, but as of the beginning of November 2024, over 80,000 euros were already needed. With the increased maintenance costs, the amount of the cost-covering water fee is likely to rise again slightly; the council should be presented with the new calculation at the beginning of December. The numbers have already been included for 2025 if the aim is to achieve a balanced result. Apart from that, significant sums are also expected to be invested in the network in 2025. 200,000 euros will primarily go towards further upgrading the springs on Rohrhardsberg. You can cover 19,000 euros with your own funds, the rest should be financed through loans.
- Loss due to spa operations: The spa business will again cause a significant loss of 1.18 million euros in 2025. However, according to Dold, the long-term perspective is encouraging: losses could decrease from 2028 onwards, as depreciation for the ski jump and the guest’s house will then expire. You want to invest 235,000 euros, a relatively high sum. The mini golf course is to be renovated for around 125,000 euros, the upgrade of the motorhome parking space and the toilet renovation in Obertal will cost 110,000 euros. The projects are to be financed entirely with the spa company’s cash balance.
- Will it be different again? Overall, according to Steffen Dold, after years of bubbling tax revenues, a trend reversal can be expected in the coming years. The trade tax revenue was calculated at 2.1 million euros, the same as in 2024. However, one cannot expect significant additional revenue here.
The aim is to invest a total of 4.98 million euros in all areas, and almost 3.5 million euros are planned for financing. The budget will be discussed on Tuesday, December 3rd and will be approved on Tuesday, December 17th.
School building renovation
Work on the old school building in Schonach is in full swing. Mayor Jörg Frey explained at the most recent council meeting that the screed had been laid on the upper floor and the photovoltaic system had been installed. Diligent work is being done on the facade as well as on the elevator, electricity, water and wastewater. Mayor Frey announced that the street would have to be torn up in order to lay the supply lines there. Overall, completion at the beginning of January will be a sporting affair, but we are hopeful that we can get it done. “From February 1, 2025, Dr. Siepe and Dr. Schwarz will provide medical care here and ensure modern care close to home for the citizens of Schonach and the surrounding area,” emphasized the Mayor of Schonach in a press release.
* How is the current economic situation in Germany impacting Schonach specifically, and how does this differ from challenges faced by other municipalities?
## World Today News: Interview on Schonach’s Budgetary Challenges
**Introduction:**
Welcome to World Today News. Today, we’re discussing the challenging budgetary situation facing the town of Schonach, as outlined in a recent council meeting. We’re joined by two distinguished guests:
* **[Guest 1 Name]** : *[Guest 1 Title/Expertise]*
* **[Guest 2 Name]** : *[Guest 2 Title/Expertise]*
Thank you both for joining us.
**Section 1: Economic Downturn and Municipal Finances**
* **Interviewer**: Mayor Frey expressed concern about the “upswing being over” and the need to tighten belts. Can you both elaborate on the broader economic context driving this downturn, not just for Schonach but also for Germany as a whole?
* **Interviewer**: Treasurer Dold highlighted the impact of reduced trade tax revenue and increased financial equalization levies on Schonach’s budget. How common is this challenge for other municipalities, and what strategies are being implemented elsewhere to mitigate these effects?
* **Interviewer**:
The Mayor also emphasized the need for a stable government with clear guidelines after the upcoming elections. How important is political stability for economic recovery, and what policies might be most beneficial for local communities like Schonach?
**Section 2: Investment Priorities and Financing Challenges**
* **Interviewer**:
Despite the budgetary constraints, the council approved a substantial investment plan, including the renovation of the old school building.
How do you view the balance between cutting costs and making essential investments in public infrastructure and services during challenging economic times?
* **Interviewer**:
A significant portion of the investment plan relies on loan financing. What are the long-term implications of this strategy, and are there alternative financing models that Schonach could consider?
* **Interviewer**:
The spa business continues to generate substantial losses. Do you see any potential solutions for making this sector financially sustainable, or should the focus shift towards alternative uses for these facilities?
**Section 3: Looking Ahead**
* **Interviewer**:
What advice would you give to the Schonach council and its citizens as they navigate these challenging economic times?
* **Interviewer**:
How optimistic are you about Schonach’s future economic prospects, and what factors do you believe will be crucial for its long-term success?
**Conclusion:**
Thank you both for sharing your insights into this complex issue. The situation in Schonach reflects broader economic challenges facing communities across
Germany and beyond. It’s clear that careful planning, strategic decision-making, and a collaborative approach will be essential for navigating these uncertain times.
