"Their worldwide exports transformed them into some of the most prosperous regions in Europe, but now Germany's auto capitals are veering toward harder times. Cities like Wolfsburg, Ingolstadt and Stuttgart home to Volkswagen, Audi and Mercedes, respectively are seeing dramatic drops in tax revenues as their flagship firms struggle. The result has been a messy budget season, with officials scrambling to cover widening funding gaps through borrowing, higher fees and spending cuts."
"In Friedrichshafen, a high-earning community on Lake Constance in southwestern Germany and home to auto parts supplier ZF, the city is set to more than double fees for day care over the next two years, a shock for many families. In Ingolstadt, the government is cutting public events and trimming city staffing while borrowing big. It even nixed the purchase of Christmas trees for public spaces."
Cities built around Germany's auto industry are experiencing sharp declines in commercial tax revenues as flagship automakers face falling demand and tougher competition. Municipal budgets face widening deficits that officials are covering with increased borrowing, higher fees, and spending cuts. Some communities plan substantial daycare fee increases; others are trimming public events, cutting staff, and canceling modest expenditures like public Christmas trees. Rising energy and labor costs have squeezed corporate margins, and revenue growth has lagged inflation, producing stagnating tax income. The combination has produced a difficult budget season for many local governments.
Read at www.dw.com
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