Graz Implements Project Delays and Additional Budget Cuts

The city of Graz is taking further measures to tighten its financial belt. The city's financial officer has recently presented the 2024 budget results, indicating that while the financial situation remains challenging, it has improved compared to previous expectations. The operational deficit was recorded at EUR16.6 million, and the overall debt rose from EUR1.542 billion to EUR1.744 billion. To address this growing financial burden, the city plans to identify additional cost-saving measures amounting to over EUR15 million by June. Consequently, several projects, including the redesign of Kaiserfeldgasse and the construction of a new skatepark at Grünanger, will be postponed.

According to the financial officer, the budget results reflect ongoing economic crises and unfavorable conditions. The anticipated economic recovery has yet to materialize, compounded by external factors such as geopolitical tensions and tariff threats. The prolonged absence of a fully functional government in Austria has further complicated the financial landscape. Additionally, the new legislation concerning care services in Styria is expected to impose significantly higher costs on Graz than the initially projected EUR30 million.

Despite the operational challenges, the city has seen increased revenue attributed to higher fees resulting from an influx of new residents. In a third consecutive year of economic downturn, Graz has experienced reduced federal revenue, which has not kept pace with inflation. The per capita debt in Graz now stands at EUR5,698, while the city's total assets have increased to EUR4.451 billion, equating to a per capita asset value of EUR14,542.

While the financial officer acknowledged the substantial revenue challenges facing the city, there have been some positive developments. Increased collections from property taxes and parking fees have generated an additional EUR2.5 million, and the growing population has led to higher income from sewer and waste management fees, totaling EUR1.8 million. However, the city faces a pressing need for expanded infrastructure, public services, and transportation to keep pace with its population growth.

The financial director cautioned against a complete halt to investments, warning that such a move could lead to long-term setbacks that would be difficult to recover from. Essential investments are still required, and notable expenditures from the previous year included EUR14.7 million for the renovation of the Reininghaus primary school, EUR10.5 million for district heating expansion, EUR9.4 million for the procurement of 15 new trams, and EUR6.8 million for 33 new articulated buses. This autumn, the new fire station in the eastern part of the city, which cost EUR4.9 million to construct, is set to open.

Support for these financial assessments was provided during a press conference by a representative from the Center for Public Administration Research, who noted that Graz is not alone in its economic struggles. Municipalities across Styria experienced a significant drop in savings rates in 2023, a trend that has yet to reverse. Without proactive measures, the financial flexibility of local governments is expected to remain severely limited in the coming years. The representative highlighted that the responsibility for co-financing social services has increasingly shifted from the regional government to municipalities, leading to a precarious financial situation for both small towns and larger cities like Graz. This imbalance in revenue distribution among federal states exacerbates the challenges faced by local governments, which find themselves caught between the need to consolidate finances and the demand for enhanced service delivery.

To navigate this difficult situation, short-term financial assistance from federal and state authorities will be necessary. Local politicians may also need to make difficult decisions, potentially resulting in reduced service offerings.