Speech OB 09.11.2011

The spoken word counts!

Dear city councillors, dear citizens, dear Mrs Wesseler, dear mayors, ladies and gentlemen,

As I do every year, I would like to present the budget to you for discussion and decision with this presentation to the City Council. It reflects the objectives for our city, contains the EKKO measures and, once adopted, will form the basis for our future actions.

As Treasurer, Mr Brehm has taken the lead in this complex and demanding task of preparing the budget for the first time. The process of weighing up the content is always a joint effort by the top management. I would therefore also like to thank the mayor and all employees involved.

We are aware of the responsibility that a further reduction in the deficit and the simultaneous pursuit of our city's development goals require strategic planning, the will to save money and at the same time optimism and courage.
Our city's budget for 2012 has a volume of 542 million euros in income and 585 million euros in expenditure.

In addition, there are investments in the financial budget totalling €53 million in payments and €40 million in receipts

Dear City Councillors,

I would first like to look with you at the income, i.e. the revenue, presented in the draft plan:

Our most important own revenue is trade tax.

If we look at the development, this reflects the growing economic strength in our city.

According to the plan, trade tax revenue will rise from 94 million euros in 2012 to 106 million euros in 2015. How reliable is this forecast development?

As you know, I had the opportunity to accompany Minister President Tillich on a tour of our city last Wednesday. One of the stops was the Chamber of Crafts. The current economic survey was handed over. The key message is: the skilled trades are running at full speed!

The Managing Director of the German Engineering Federation also stated: "Although the pace of growth has slowed as expected, we see no signs of the economy cooling down."

Whether in mechanical engineering, the automotive industry or the manufacturing industry in Chemnitz: the order situation is good to very good. In some areas, growth is higher than in Germany.

However, all associations, chambers, including the Chemnitz Chamber of Industry and Commerce (IHK) and Chamber of Crafts (HWK) and companies are making a joint appeal to politicians:

"A new crisis must not be talked up!" Even if the order situation does not react as quickly and as hysterically to negative headlines as the stock market, a talked-up slump can quickly become a fact.

We should take this appeal very seriously. And the optimism in industry and trade should be an incentive for us to continue to actively promote the economy. The city is an important and reliable client for our companies. With our planned investments and orders, income also comes back to us in the form of trade and income taxes in the regional economic cycle.

The tax estimates in May and November also underpin this positive trend.

Address,

The development of the municipal share of income tax is also positive.

We are planning revenues of 44 million euros in 2012, which are expected to rise to 48 million euros in 2015. These figures have a solid basis. In the skilled trades sector, employment figures have risen by an average of 7% this year. There are also new hires in mechanical engineering and other sectors.

At 10.6%, unemployment is at its lowest level since 1991, which is a good thing. However, this has not yet helped the over 55s and long-term unemployed in particular to find work. This requires further initiatives from the federal government that are appropriate to the situation and an even greater willingness on the part of employers to give these people a chance.

Key allocations from the state, which are decided by the state parliament via the Financial Equalisation Act (FAG), form an important pillar of our income. The federal and state governments transfer many tasks to the municipalities by law. These and other tasks are to be financed and realised for the citizens.

In addition to the good forecast for our tax revenues, the declining key allocations from the state are a burden on our budget planning.

The negotiations on financial equalisation for 2011/2012 were dominated by the need to cope with the loss of federal and state revenue due to the economic and financial crisis. The key allocations planned by the state for the municipalities in the current double budget fell. The general allocation for 2012 fell by 15%, i.e. around EUR 26 million compared to 2010, and has so far fallen by a further EUR 6 million each for 2013 and 2014.

The Financial Equalisation Act for 2011 and 2012 has been finalised. It will be renegotiated next year for 2013 and 2014. The latest tax estimates assume a 40 billion plus in the federal budget by 2015.

The revenue of the Free State will also increase compared to the crisis-ridden planning from 2010. I assume that the principle of financial equalisation will continue to apply and that allocations to local authorities will increase.

The solidarity pact funds will decrease. We have to plan for that. But the principle of solidarity and distribution also applies to additional revenue.

I therefore ask you, honourable members of the state parliament, to help fight to ensure that the cycle of rising economic activity - revenues - and the awarding of contracts by local authorities is not disrupted, but kept going. Please get actively involved in the discussion on changing Saxony's municipal financial equalisation system. Efforts to change the FAG to the detriment of the three independent cities must not be allowed to prevail.

Address,

There are a number of changes in the draft plan for 2012 that we have made in response to current developments. They affect both the revenue and expenditure side of the budget.

With the change in the law on the education and participation package, the city can book additional income from the federal government and thus ease the burden on the city's budget. We can also expect considerable relief with the gradual takeover of the basic old-age pension by the federal government by 2014. The federal government has kept its word here and wants to strengthen the municipalities financially.

In contrast, we will have to compensate for reductions of around EUR 4.5 million in income from the Hartz IV equalisation scheme. The federal government has suddenly reduced the special allocations for the new federal states this year.

Personnel costs have been estimated at an additional expense of 5.5 million euros until 2015. This is due to pay rises and recruitment in the daycare centre sector.

Despite the difficult financial framework conditions for this planning period, we propose that you, dear City Councillors, continue to pursue our central development goals.
In doing so, I would like to focus on key expenditure.

These are

1. investment in education

It is our common will to prioritise this area. In the last 5 years, almost 80 million euros have been invested in our schools.

For example in

• the vocational school centres I and II with 26 million euros,

• for the Kepler, Andrè and Agricola grammar schools for approx. 18.0 million euros

• the primary schools Darwin, Einstein, Siegmar, Rudolf, Schloß and GS am Stadtpark for around 11.7 million euros

• and the secondary sports school for 10.0 million euros.

Around 13 million euros were invested in our daycare centres.

A major success for local authorities and the economy was the Economic Stimulus Programme II, which has almost been completed with its 86 measures. In the last two years, an additional 40 million euros have been invested in schools, daycare centres, cultural and sports facilities in particular.

We will continue our investments in schools and daycare centres in 2012.

The draft plan envisages an investment sum of around 12 million euros for schools and around 4 million euros for daycare centres. The focus is on the school for the physically disabled and the home for physically disabled children. With the 31 million euros currently planned, this is the largest investment for the coming years. We expect to receive the funding decision in the next few days.

The excellent cooperation we have enjoyed with our Technical University for many years is bearing fruit. Four weeks ago, you agreed to the sale of the Aktienspinnerei to the Free State of Bavaria for a symbolic euro. The transfer of ownership has now also been notarised. This is associated with investments by the state totalling 40.0 million euros. This forms the core of the development of the new university neighbourhood.

And that brings me to the second focal point,

2. the development of the city centre

The final stage in the development of the city centre in the narrower sense has begun. With the completion of the archaeological museum, the forecourt to the museum and the completion of the rampart next year, the most important milestones have been reached. The necessary financial resources totalling around 7 million euros have been budgeted in accordance with their decision.

Following the design competition, the conversion of the Stadthalle into a modern congress centre is to be realised. We have budgeted 350 thousand euros for planning services for this in the 2012 budget. This is reflected in the increase in the subsidy to C³ GmbH. From 2013 onwards, around 1.5 million euros have been earmarked for the remodelling. However, the actual implementation is also dependent on the successful completion of several ongoing audits and consultations on the issues of tax and state aid law.

Step by step, we will concentrate on the development of the city centre towards Brühl. The initial course has been set for the Brühl development. The remodelling of the main railway station and the Chemnitz model will also promote this.

3. quality of life in our city

What constitutes quality of life in concrete terms is answered individually by the people of Chemnitz.

Our task is to utilise the resources of the budget in such a way that our citizens can experience Chemnitz as a familiar, interesting and lovable hometown. However, we can never fulfil all wishes and implement all ideas. So here, too, it is important to prioritise. Around 49 million euros are planned in the budget for culture and 20 million euros for sport - in each case more than this year. This is also the result of rising management costs, which we have adjusted in line with demand.

147 million has been budgeted for social assistance and €115 million for youth work and child, youth and family support.

These include

• social benefits totalling €92 million,

• the social levy of around 29 million euros,

• youth welfare at around 7 million euros,

• 18 million for educational assistance, to name just a few.

We have budgeted around 65 million euros for our daycare centres.

The payment to GGG for the remodelling of the stadium on Gellertstrasse was included from 2013. 833.0 thousand in 2013 and €2.0 million from 2014 onwards.

Even if the focus today is primarily on facts and figures, they form the basis for a functioning community and quality of life. Sport, culture and social projects are important for quality of life.

Whether opera, art collections, Weltecho, the 211 sports clubs or self-help groups, they all create identity and often simply a zest for life. We need this to make development possible, whether in the economy or in the community.

4. economic development

Economic development has many pillars. It can be seen in the subsidisation of the CWE, the TCC and the Technopark. Concrete economic development always includes investments in urban infrastructure, such as road construction.
Economic development is reflected in rotating cranes in the city - at a school, a day care centre at the railway station or Schocken.
This is the regional economic cycle, which not only makes the city more modern and beautiful, but also brings tax revenue back into the city coffers.

Address,

If a city has its future in mind, it needs well-founded development goals. To achieve these, we need a robust budget plan. As a result of the global financial crisis, this has also included the implementation of the EKKO since 2011.

We take stock at the end of each quarter. We are making good progress with most of the measures. A consolidation amount of 18 million euros was agreed for 2011. Around 85% of this had been achieved by 30 September 2011.

However, there are also measures whose feasibility has not been confirmed.

For example, the sale of municipal properties and the originally planned reduction in energy costs are proving difficult.
We are working on alternative measures.

The focus remains on implementing the consolidation resolution to reduce personnel costs

Salutation,

For many years, we have always succeeded in achieving a balanced annual result or even a surplus thanks to strict budgetary discipline. We are adhering to this principle.

The projections as at 30 September 2011 show that the deficit in this financial year will probably be reduced by EUR 8.3 million by the end of the year. Tax income is expected to fulfil the budgeted figures. The planned expenses for personnel are expected to fall short by around 4 million euros. This means that we managed our finances economically in 2011. This will benefit us in subsequent years.

From a double-entry perspective (i.e. including depreciation and amortisation), the current budget shows a deficit of 43 million euros in 2012. This deficit will be reduced to 38 million euros by 2015.

When the budget is approved, depreciation and amortisation will not be taken into account for a transitional period until at least 2015. The deficit will therefore be reduced to Euro 30 million in 2012 and Euro 9.8 million in 2015.

By utilising the liquidity reserve, the balance can be achieved as planned in 2012.

In order to achieve our goal of balancing the deficit in 2015, we must continue to pursue a prudent budgetary policy. In this case, smart means consistently making the necessary savings and prioritising investments at the same time.

I would like to address you,

The draft budget presented to you is a clear commitment to the development of our city and to making savings. We have weighed up and presented the potential, the opportunities and the risks. We have neither made ourselves richer nor poorer than the situation allows.

However, this draft budget should also offer planning security - for us as the administration, for you as city councillors, for the citizens of Chemnitz, the tradespeople and industry.

It should provide the certainty that we want to keep the city on course in uncertain months worldwide. But we are not naive. None of us knows what repercussions the euro crisis could have on us. It would therefore be neither calculable nor responsible to anticipate these now.

You now have the concrete responsibility to discuss the plan in depth. Examine it and discuss with us how we want to continue shaping our city. I am sure you will do so.

In two months' time, we will then be able to create planning and action security for our city by deciding on the budget.