Civic authorities should avoid securing fresh credits: the ongoing projects teeter on the brink of failure.
Straight Talk on Schwerin's Budget Crisis: What's Up with the Residenzmuseum, Observatory, and More?
Looks like the city of Schwerin's got some serious financial strife on its hands, and key projects are hanging in the balance. The Ministry of the Interior has given 'em a stark warning: no new loans for various projects, including the Residenzmuseum, Observatory projector, Grunthal Platz, and more. Here's the lowdown on the City Council-approved budget woes and the Ministry's demands.
Say Goodbye to the Budget Approval, for Now
The Ministry sent clear as day letters to the city, informed that the current budget for 2025 and 2026 cannot be approved as is. It's a "materially illegal" budget, violating the municipal constitution and its requirement for a balanced budget.
Unsurprisingly, the council okayed the double budget back in March—but without the tax hikes proposed by the administration. That puts the municipality further off track from budget consolidation, attracting criticism from the Ministry of the Interior.
The Ministry's Demand: Three Million Euros, Stat!
The city council now needs to pull a rabbit out of their hat by June 30, achieving a minimum surplus of three million euros in the annual balance of incoming and outgoing payments. Sounds doable, but the city's being lenient, considering cost increases in social and youth welfare sectors.
Originally, the city's budget consolidation concept projected a massive positive balance of around 5.85 million euros. But without the proposed tax increases, it seems that goal might be out of reach.
Consolidation Aid in Jeopardy
If the city can't hit that three million surplus mark, the state might withhold nine million euros in consolidation aid. Ouch! The Ministry's chided the city for not adequately utilizing existing savings opportunities and failing to exhaust all revenue options.
For example, the city's yet to decide on whether to implement a revenue-neutral property tax increase for B in 2025, despite the Ministry urging they should.
The Ministry's Focus: 2025, For Now
The Ministry's assessment centers around the budget year 2025. They've got their eyes on the city, waiting to see if improvements in budget management appear in the upcoming 2026 consolidation concept. Right now, the city's planning for a negative balance of incoming and outgoing payments of around five million euros in 2026.
On the Chopping Block: Major Projects
On the verge of being axed by the Ministry are projects such as the preliminary planning for the Residenzmuseum, Observatory projector, Grunthal Platz, and more. Also on the line are a parking lot at the Sportpark Lankow, work on the north shore of the Ziegelinnensee, and the preliminary planning for the renovation of the old power plant and the youth house in Dr.-Külz-Straße.
Additionally, the city's prohibited from financing these projects via loans, as the projects aren't considered vital for fulfilling mandatory duties.
Postponed Projects: The Waiting Game
The Ministry's put the brakes on approving loans for several projects, like a new vocational school for health and social care, expansion of the bike path, investment cost subsidies for public transport, a planned central archive, and renovation of the sports hall. Combined, these postponed projects amount to approximately nine million euros.
Showdown Ahead
Finance Director, Silvio Horn, will meet with the Ministry on May 5, advocating for the Residenzmuseum. Briefings with the main committee and a special finance committee meeting are expected following his meeting.
Chairman of the finance committee, Georg Kleinfeld, has stayed mum about the letter's contents. The city remains in provisional budget management, with subsidies for clubs and associations still only payable at the previous year's level.
Stay tuned for updates! Schwerin's economic future's hangin' in the balance.
The current financial predicament of Schwerin city has raised concerns over key projects, such as the Residenzmuseum, observatory projector, and others, as the Ministry of Interior has denied approval for new loans for these projects.
The city council is under pressure to achieve a minimum surplus of three million euros in the annual balance by June 30, or risk losing nine million euros in consolidation aid, which could potentially affect various projects' funding, including the Residenzmuseum.
