Why isn’t Würzburg going into more debt?

Next Thursday, the Würzburg city council will decide during budget consultations how the city will position itself in 2021, which projects will be tackled and which will be postponed. Treasurer Robert Scheller and his employees have defined the framework in the past few weeks: the current expenses and income of the administration are calculated at around 470 million. 100 million euros are to be invested. In an interview, Scheller explains why he is optimistic.

What will the city save itself because of Corona in 2021?

Scheller: We have not drawn up an austerity budget, but will continue to invest. It is precisely at this time that the public sector is responsible for supporting the economy. That’s why we’re turning 52
Millions of euros have gone into construction investments such as the development of the Hubland, the renovation of schools and the Quellenbach car park. At the same time, it must be clear to everyone that we will not be able to fulfill all of our wishes in 2021.

Corona has caused the city’s most important source of income to collapse: trade taxes have fallen by 14 million to 75 million euros. In the next year you plan with 85 million euros and in the following years you expect a further increase. What makes you so optimistic?

Scheller: The German Government’s Advisory Council expects the economy to recover next year. I also believe that the Würzburg economy is even a little more stable. We have less cyclical industries, such as the auto industry, but more trading and service companies. I therefore assume that business tax receipts will rise again somewhat in 2021 and will return to pre-crisis levels from 2022.

We are still in crisis. In 2021, the city’s most important income items will be lower than it was before 2020, the largest expenditure item, personnel costs, will rise by 4.3 million euros due to wage increases and 25 new jobs. Missing income and increasing expenses result
a 16 million euro hole. This year the state closed this gap. He doesn’t want that next year. How will the deficit be covered in 2021?

Scheller: Mainly through withdrawals from our saved reserves and through borrowing for the first time in many years. During the crisis, a new ordinance allows us, as an exception, that we can run up almost eleven million euros in debt without having to cut investments.

At the moment, loans are cheaper than ever. The federal government takes out 100 billion new loans because of Corona, the Free State 20 billion. Why isn’t Würzburg going into more debt? Instead of 11 you could also raise 12 or 20 million euros and thus fulfill all wishes.

Scheller: Because we will have to repay the debts we are incurring today in the next ten years and thus limit our room for maneuver. The more we have to repay in the future, the less we can invest in the future.

The room for maneuver is already being restricted very specifically: savings that were made, among other things, for the construction of line 6 to Hubland are now being spent. Did that mean that the Straba plans died?

Scheller: No, of course not. We plan to only incur new debts in 2021, but we will probably actually need a total of 18 million euros from the saved up by 2024 to cover our expenses. That still leaves 11 million euros in reserves. You just have to decide how much money you will take away from it now and in the next few years. For the realization of line 6, however, the decisive question is how high the state subsidy will be and what permanent deficit the operation of the line entails.

The city’s mountain of debt is expected to have grown to 224 million euros by the end of next year. That is more than in many other Bavarian municipalities. Why isn’t the city saving on spending instead of running into more debt?

Scheller: We have paid off more than 40 million euros in debts in recent years. Most of the remaining debt was incurred decades ago and the eleven million euros that are now being added will be reduced more quickly. But we also save. For example, more new administrative positions were under discussion in 2021. Now we will only increase the staff where it is absolutely necessary. We will not start some planned investments next year either. For example, the around 14 million euros expensive renovation of strips and
Friedensstrasse or the Main Cycle Route.

With the approach for the cycle path pool you save anyway. The city council made 500,000 euros available for this last time. You are planning only 300,000 euros for next year. More money here too
invest could be a wish for some councilors to insist on Thursday.

Scheller: There is probably a discussion about which investments can be postponed and which cannot. An important criterion is the question of economic efficiency. For example, it makes more sense to finish construction sites that have already started, such as the renovation of Nürnberger Straße, instead of stopping them and starting over somewhere else.

There was so little money in the city’s treasury in the early 2000s that school swimming pools were closed and holes in streets were not repaired. Do the citizens have to adjust to this?

Scheller: No. Because in the Corona crisis the starting position is better than it was then. Unemployment is lower and the economy is more stable. We are not experiencing a long-term economic downturn now, but a corona-related dent. We can therefore continue to undertake the necessary renovations and new investments.

Before Corona, 60 city councilors and administrators met for two days from morning to evening in the council chamber for budget consultations. How will that work under Corona conditions?

Scheller: Municipal bodies are allowed to meet to take the necessary decisions. We will meet in the Congress Center, where there is a very good ventilation system and more space. We have also agreed with the political groups to streamline the deliberations and
for example to discuss important points beforehand. I am sure that in this way we can advise the budget in a responsible manner.

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