More New Apartments Approved in Hesse, but Municipalities Across Germany Sound the Alarm

The German federal state of Hesse has recently recorded an increase in the number of approved applications to build new apartments. These data, provided by local statistics, signal a potential revival in the housing construction sector, which has been stagnant for months. This information appeared alongside reports of a deepening financial crisis among municipalities in other regions of Germany, creating a mixed picture of the situation. Lord Mayor of Mainz Michael Ebling appealed in harsher terms than ever for urgent action to address the problem of high municipal deficits. „Diese hohen kommunalen Defizite müssen alle wachrütteln. Wir können die notwendigen Investitionen in Schulen, Kitas und Infrastruktur nicht länger aufschieben.” (These high municipal deficits must wake everyone up. We can no longer postpone the necessary investments in schools, daycare centers, and infrastructure.) — Michael Ebling His words reflect the frustration of city and municipal leaders in Rhineland-Palatinate, Saarland, and other states, who are burdened by rising energy costs, refugee care expenses, and general inflation. These factors significantly limit their investment capacity and threaten cuts to key public services. Municipal finances in Germany are based on a complex system of distributing tax revenues between the federation, federal states, and municipalities. After World War II, as part of reconstruction, the position of local governments was strengthened, but for years they have been struggling with growing responsibilities and insufficient funds. The 2015 migration crisis, the recent pandemic, and the war in Ukraine have significantly strained their budgets. In response to this crisis, municipal associations have issued specific demands, termed a "weckruf" (wake-up call alarm bell), directed at future state governments. These postulates were formulated just before the upcoming state elections, giving them a clear political character. The main demands include ensuring stable and predictable subsidies from state governments, a thorough reform of the tax distribution system, and granting municipalities greater autonomy in shaping local fees and taxes. Local government officials emphasize that without such systemic changes, their situation will only worsen, and investments in schools, nurseries, and infrastructure will have to be halted. Parallel to the discussion on finances, a strong thread concerning the construction process itself appears in the media. Numerous voices, including from political and expert circles, point out that "construction and modernization must become faster and cheaper." This postulate refers to bureaucratic barriers, lengthy permit procedures, and high costs of materials and labor, which hinder the development of housing construction and renovations. Meanwhile, as reported by "Süddeutsche Zeitung," municipalities' hopes for quick, direct aid from the federal government in Berlin have clearly weakened. This means local governments cannot count on ad-hoc support packages and must prepare for long-term management of limited resources, further underscoring the importance of their appeals for systemic reforms. The crisis in municipal finances and problems with housing construction are thus becoming central topics of public debate in Germany.