Financial hardships: Small municipalities demand fair solutions!

Financial hardships: Small municipalities demand fair solutions!

On April 2, 2025, an important conference took place in the “Nordwald Space” that brought together around 35 participants from science, local politics and civil society. This event was hosted by the Catholic University of Eichstätt-Ingolstadt organized and aimed at an inter- and transdisciplinary exchange as well as the networking of the actors.

The podium was prominently occupied by experts such as Prof. Dr. Achim Truger, an economist, and Prof. Dr. Kathrin Großmann, an urban and spatial sociologist. The group was supplemented by Hans-Peter Mayer, director of the Bavarian Municipal Association, and Dr. Barbara Schönig, professor of urban planning. The discussion was moderated by Dr. Thomas Metten. Mayor Michael Pöhnlein of Nordhalben emphasized the urgency of a dialogue between science and practice during the conference.

Financial challenges in rural communities

A central topic of the conference was the analysis of the structural problems of municipal financing. Prof. Dr. Achim Truger noted that the current financial distribution causes considerable difficulties for small rural communities. These municipalities are often confronted with increasing tasks and come under increasing pressure due to restrictive funding conditions, while financially strong cities benefit from these conditions.

The participants agreed that state consolidation aid, which is tied to strict conditions, hinders the development of municipalities. Borrowing for economically viable projects becomes almost impossible for smaller communities. Due to savings in the area of ​​voluntary tasks such as youth work or culture, voluntary commitments often bear the burden that the municipalities would otherwise have to take on.

In addition, it became clear that the current municipal financing mechanism in Germany is structurally disadvantageous. The distribution of financial resources is unbalanced in favor of larger cities. “Inhabitant refinement” means that financially weak small communities are further marginalized. In this context, temporary funding programs are not a long-term solution as they often do not offer the necessary personnel or financial stability.

Structural reforms are imperative

The discussion about structural reforms to create new financial scope was very well received. A common suggestion from many participants concerned the fair distribution of new funds to support financially weak municipalities. Political lobbying and existing conflicts of interest were identified as massive brakes on necessary reforms. This can lead to entire regions being neglected, which further increases the burden on local politics and voluntary work and can cause social tensions.

In this context, the challenges for rural municipalities are particularly pronounced: demographic change and declining population numbers are contributing to the strain on the municipal system. The decline in population often leads to a loss of allocations, while municipal services cannot be reduced to the same extent. Like the report of Federal Agency for Civic Education clarifies, there is a conflict of objectives between the advantages of smaller municipalities, such as proximity to citizens, and the advantages of larger units, which enable greater efficiency and specialization.

Finally, it was highlighted that in rural communities, political representation is closely linked to highly elastic voter communities that accommodate specific local concerns. These voter communities contribute to strengthening political participation, but face similar challenges when it comes to structural reforms. It was emphasized that continued exchange between science and practice is essential for finding solutions in these complex contexts.