Potsdam imposes budget freeze due to tense financial situation

The Brandenburg state capital Potsdam has imposed a budget freeze due to tight finances. “The background is the significantly worsening financial and budget situation in the state capital,” said the city. Therefore, five percent of cash-effective expenses for goods and services and other expenses would be blocked. According to the city, social benefits and subsidies such as housing benefits, educational assistance and basic security in old age are not affected.

Chamberlain: Bitter, but unavoidable

“The budget freeze is a bitter but unavoidable signal,” said treasurer Burkhard Exner (SPD). “The financial and economic conditions are forcing us to take this drastic but unavoidable step.” He warned: "If even economically strong centers like Potsdam get into such difficulties, the state and federal government must urgently take countermeasures." The ban initially applies to the fourth quarter of this year. It will only be lifted if the budget situation improves noticeably.

Social costs are rising

The reasons for the block included an annual deficit of around 45.6 million euros for 2024, rising social costs and future state funding that would be significantly below the 2025 level. Without countermeasures, there is a risk of a loss in the city's liquidity. It is already becoming apparent that a balanced budget for 2028 can only be achieved with significant savings efforts.

Budget freeze in several districts

The financial situation is not only tense in Potsdam. According to the district council, the districts of Barnim, Havelland and Potsdam-Mittelmark have imposed a budget ban this year, and Oberhavel has imposed a partial (limited) ban. Last year, Ostprignitz-Ruppin and Elbe-Elster announced a budget freeze.

Local government summit

On Friday, the district administrators, mayors and representatives of the municipal associations will discuss, among other things, the financial situation with ministers Jan Redmann (CDU, Interior), Daniel Keller (SPD, Finance) and René Wilke (SPD, Social Affairs). The double budget for 2027/28 stipulates that, according to the Ministry of Finance, the municipalities should receive around 250 million euros more in the so-called financial equalization compared to 2026.