Use municipal funds in a resource-efficient way
What does the city do with our money?
"First raise taxes ..."
This may be what some people think when they consider the question of how the public sector finances its expenditures. There is a strict, legally prescribed sequence for the procurement of funds.
The demands on cities are subject to constant change.
New tasks are added regularly, only occasionally are they dropped. As a rule, additional tasks also mean additional expenses (material and/or personnel costs).
How are expenses financed?
There are often state subsidies for projects. And for certain services to the population, the city can levy contributions or fees, such as the parental contributions at the kindergartens. However, these revenues do not cover all costs. Therefore, a considerable funding gap often remains. The city is not free to decide how to close this funding gap. As a matter of priority, the city checks whether it can save on other expenses. This can lead to measures being cancelled altogether, reduced or postponed to later years. For example, many road improvements have been postponed in recent years.
Important decisions are made by the council. Since the council is made up of different parliamentary groups and sometimes controversial opinions and focal points can be discerned on the issues, deliberations and discussions take place here and in the committees. Only when it is no longer possible to reduce expenditure is revenue to be raised in accordance with the "principles of fundraising". This is what it says in § 77 of the Municipal Code for the State of North Rhine-Westphalia:
"The city shall procure the funds necessary for the fulfilment of its tasks
1. as far as justifiable and necessary from special fees for the services provided to it by
2. otherwise from taxes, insofar as the other funds
are not sufficient."
And only if other financing is not possible or would be economically inappropriate may the city finally take out loans.