Speech OB 24 October 2007

on the presentation of the draft budget for 2008 at the city council meeting on 24 October 2007

The spoken word counts!

Dear City Councillors

Dear residents of Chemnitz,
Ladies and gentlemen,
Chemnitz, city of modernity, is written on the motorway signs that have recently been advertising Chemnitz. And Chemnitz as a city of modernity is a good headline for our city's programme, which we have described in figures and compiled as facts in the budget.

So what better occasion than to use the presentation of the draft budget, as we did last year, to further define the course of our city - for the next twelve months, the next three years and for long-term goals.

The budget is, allow me to repeat this once again, our room for manoeuvre cast in, admittedly, many figures.

What can we do, what can we achieve, what can we afford?

I would like to start my speech with three cornerstones of our budget strategy.

1. No new borrowing
2. a balanced budget and financial plan for the coming years and
3. long-term debt reduction.

The mayors set these cornerstones together with me at a closed meeting in April this year and the entire budget planning was based on these cornerstones.

Modernism - this term is often, but not exclusively, used in architecture and the visual arts. Modernism begins here with Picasso in 1907, an era that represents an economic heyday from Chemnitz's perspective. It characterises the face and self-image of this city to this day.

Understanding Chemnitz as a city of modernity therefore means

• continuing the tradition of this city, which means
• Chemnitz modernity into today and tomorrow.

The tradition and strength of this city lie first and foremost in its economy and its close connection to science, in other words the creative drive of its people.

• Today, being a city of modernity means that Chemnitz is child- and family-friendly.
• Being a city of modernity means that Chemnitz embraces demographic change and is working with many partners to develop a new urban development concept.
• Being a city of modernity means that Chemnitz fulfils its social responsibility.
• Being a city of modernity means: Chemnitz offers cultural programmes for the various interests of its citizens as well as highlights and unique attractions.
• Being a city of modernity means that Chemnitz maintains its room for manoeuvre for the future through a prudent budgetary policy.

Chemnitz modernity therefore means Being open to developments in the best sense of the word. Chemnitz as a modern civic city!

To my first point:
The tradition and strength of this city lie first and foremost in its economic power. It is the basis for modern development.

2007 is a year of growth. Turnover in the manufacturing industry has risen again; in the first half of the year by 16.2 %, productivity by 15.8 %. This is the highest growth rate since 2002.

The favourable economic data also had an impact on the number of unemployed. Compared to the previous year, this rate has fallen slightly, but at 14.5% in September, it is still far too high.

The current city ranking published by Wirtschaftswoche has awarded Chemnitz the status of "most business-friendly city" compared to all 50 major cities analysed in Germany.

This is a great success for our work. Because behind this result: The entrepreneurs of this city certify that our administration, and therefore also you, dear city councillors, are "business-friendly".

That's a compliment, but it's not a peace of mind. After all, more jobs and fewer unemployed people for Chemnitz and the region remain a key objective.

That is why we must not slacken in our efforts to promote the economy.

Fortunately, the demand for commercial space is increasing again. We are therefore preparing the development of two new areas. The budget also includes a further part of the development of the Wasserschänke industrial estate.

In total, funds totalling EUR 2.8 million are available for additional commercial areas in 2008.

The 2008 budget provides EUR 18.8 million for investments in roads, and thus in the infrastructure of this city, EUR 1 million more than in the current year.

The city's largest building construction project in the 2008 budget will be the start-up building in the Techno-Park on the Smart Systems Campus. Funds totalling over EUR 13 million are available in the city's budget for this start-up building.

Construction will start in 2008 and be completed a year later.

This is the decision here in the City Council and at the same time a strong commitment to the link between business and science.

At the same time, we are underpinning our co-operation with the Technical University in many areas.
One example of this is the co-operation agreement between the Technical University and the City of Chemnitz, which is presented to you as an information document.

Networks, knowledge transfer to our administration and vice versa, city marketing and much, much more are the links between the university and the city.

Chemnitz has a future as a place of learning, teaching, research and development.

The agreement is to be signed on 14 November, directly before the next city council meeting. I cordially invite you to attend today.

With the close links between the city and the university, we naturally also want to attract even more young people to Chemnitz. So that they study here and ideally stay here after graduation, work here, live here and start a family.

2,500 first-year students in the new semester, 30 per cent more than last year, and a significantly larger proportion from the old federal states - that is the pleasing result for the academic year that has just begun. Congratulations to our university!

The students will enrich our city and they should feel at home in Chemnitz. This cooperation agreement also serves this goal.

The halving of the number of school leavers will present us with new challenges in recruiting students in the coming years.

Chemnitz currently occupies a very good 8th place in the Wirtschaftswoche city comparison for an important criterion: the proportion of highly qualified people in all employees. This value needs to be stabilised so that research and development can continue to take place here.

This is another reason why the City of Chemnitz refunds part of the semester fee to all students who are Chemnitz residents. EUR 190 thousand has been budgeted for this in 2008.

Considering the demographic development in our city, the willingness of the children of our city and the region to study technical subjects or learn a technical profession must be increased now at the latest.

Good prospects on the labour market make the argument easier, but these prospects must also be known to our children and their parents.

The working group I set up over a year ago for this purpose has already achieved results.

• Schools and companies are increasingly concluding co-operation agreements,
• Teachers are going to companies for further training and
• parents' evenings are being organised to provide information about the actual demand for skilled workers in companies.

We need to help organise this so that young people can make a successful start to their own professional future. Because this is how we create prospects: For the young people of Chemnitz and for the city of tomorrow.

This brings me, ladies and gentlemen, to my second point:

Being a city of modernity must mean today: Chemnitz is child- and family-friendly.

In the competition between regions to attract young people, family friendliness is often a decisive advantage.
Many East German municipalities have maintained this advantage over the past decade and a half and are therefore in a good starting position.

After the question "Where can I find work?", which young people ask themselves, there is another: How can I reconcile work and family life?

Being child- and family-friendly starts with the youngest children in nurseries and kindergartens. Education and childcare are the benchmark for whether and how parents can reconcile work and family life.

In Chemnitz, there are around 15,000 places available in crèches, kindergartens and after-school care centres. Not always in the facility that is first on the parents' wish list, but overall to cover demand.

Due to the ever-increasing utilisation of places, we will continue to expand our capacities and adapt to this fortunately growing demand.

It is therefore only logical that the current subsidies for daycare centres will also increase by EUR 1.4 million in 2008. This takes into account the increase in staff to improve the quality of care and the pay rises.

Overall, expenditure totalling EUR 52 million is planned for the education and upbringing of our children in crèches, kindergartens and after-school care centres. The municipal share of funding is 14% higher than two years ago.

Expenditure in the area of investment is growing even more strongly, as it is well known that we still have some catching up to do here. Compared to the 2007 financial year, we are increasing expenditure by 66% and are proposing to use EUR 6 million next year for the refurbishment of the day care centres.

By March 2008, the administration will also present you with an investment concept for all day-care centres. In preparation for the budget consultations, the City Council will receive the requested prioritisation lists.

The subsidies for youth work and educational assistance will be increased by EUR 86 thousand compared to the previous year. They amount to EUR 22 million in 2008. An increase of EUR 1.2 million was already made in the previous year.

These funds will be used to

• finance the leisure facilities for children and young people run by independent organisations,
• grants are awarded for project work,
• provide educational assistance for families and
• cover the fees for childcare in daycare centres for low-income parents.

Grants for sport are also increasing again:

• from EUR 8.3 million in 2006,
• EUR 8.9 million this year
• to EUR 9.5 million for 2008.

Almost half of this, namely EUR 4 million, is earmarked for the promotion of sports clubs - EUR 200 thousand more than in 2007.

The largest increase here is EUR 149 thousand more for sports clubs for the renovation of club-operated sports facilities. In addition, club grants totalling EUR 70 thousand are planned for the first time for important sporting events.

This represents an 18% increase in sports funding for clubs alone over the last two years.

In the capital budget, EUR 2.2 million is available for sport, which is EUR 440 thousand more than in the previous year.

The largest measures here are the partial refurbishment of the municipal swimming pool, the sports forum, the Sachsenhalle and the refurbishment of the sports hall at the Schloßteich.

Chemnitz is successfully focussing on education. This is shown by the Family Atlas 2007, which was recently presented by the Federal Minister for Family Affairs von der Leyen.

• In the area of education and training, the city ranks third in Germany.
• In a comparison of the 40 major German cities, we are in first place!

This top position should be an incentive for us. So no Sunday speeches about children being our future - which is true - we act like it:

We are therefore proposing to accelerate the refurbishment of our schools and are increasing expenditure for all types of schools from EUR 9.9 million in 2007 to EUR 23.3 million next year. That is an increase of almost 140 per cent.

One of our priorities is to do more than before for our primary schools. That is why more than EUR 11 million is planned in the 2008 budget and a further EUR 16 million in the financial planning period. This will enable us to begin the urgent reconstruction work at the city's primary schools.

And I would like to take this opportunity to make it clear once again: no more primary schools will be closed in the foreseeable future, i.e. by 2010.
The focus will also remain on the sports school centre with secondary school, three-field hall and supply facility, for which the construction decision is currently being made.

Other focal points will be the school for the physically disabled and the Chemnitz school model, for which the basic decision on the Heinrich-Schütz-Straße site has been made and for which the funds are ready for the start of planning.

The City Council will also receive an investment concept for all secured school locations by March.

However, we are not only investing in school buildings, but also in content. All-day programmes are an important addition to teaching.
Each Chemnitz school receives a budget for its own management, from which its own funds are raised to finance the all-day programmes. At present, 37 schools in Chemnitz are already making use of the opportunity to set up all-day programmes.

Family life and family living in the city centre - the first prize that Chemnitz won in the "Ab in die Mitte" competition proves that we are on the right track here. A few days ago, I was able to accept the symbolic cheque for 30,000 euros on behalf of all of you.

3rd City of Modernity, that means further development,
Chemnitz is embracing demographic change and working with many partners to develop the new urban development concept

The population of Chemnitz fell only slightly in the first half of the year, by 0.1 %. In Saxony as a whole, the decline in population is three times higher.
At the end of June, 245,600 people lived in the city, only 150 fewer than at the beginning of the year.

This is a good sign, but it also means that we must continue to tackle our urban development tasks.

That is why there is no alternative to urban redevelopment for Chemnitz in the future, i.e. demolition on the one hand and upgrading residential neighbourhoods on the other.

The visible quality of our city is a key argument in favour of a location. It allows for a good attitude towards life and will hopefully continue to grow.

For young people, this quality of life is a third criterion alongside employment and family suitability when they answer the question: Will I stay here? Am I going to leave? Will I make Chemnitz the centre of my life?

The urban development concept, which is currently being drawn up and will accompany further urban redevelopment, includes both the development of the city as a whole and development concepts for the city districts up to 2020.

It is being developed and discussed with many stakeholders, the citizens and with you, dear city councillors. The resolution is scheduled for December 2008.

If you walk through our city with your eyes open, you will see that whole rows of houses are still empty. Demolition is unavoidable in some cases.
But it is also noticeable: A rethink has begun in Chemnitz. The old building fabric is being treated more carefully. Where we can influence it, streets should no longer be perforated.
An architectural competition is to help develop new ideas for difficult streets such as Leipziger Strasse. I very much hope that there will be better solutions than just demolition.

A total of EUR 23.7 million is available for further urban development in 2008, of which EUR 13.6 million is for upgrading measures and EUR 10.1 million for demolition.

The city centre, the Gründerzeit districts and the Heckert area continue to have priority for upgrading measures. The design of the city entrances, the protection of old buildings and the revitalisation of brownfield sites are further focal points of upgrading and urban development.

These measures are co-financed by subsidies from the various programmes. The city's own contribution in 2008 is EUR 5.3 million.

In addition, Stadtumbau GmbH is looking for solutions for endangered private properties, bringing interested parties and owners together and supporting both sides in the difficult process of reconciling interests. Hopefully with much success.

As far as our budget is concerned, the archaeological museum is at the top of the list of urban development measures. Around EUR 20 million has been earmarked for this in the city's budget over the next four years. I hope and expect that these funds can now be utilised for the desired purpose thanks to the activities of the state government.

Other urban redevelopment measures include the completion of the Gunzenhauser Museum, the continuation of the rampart to Johannisplatz, the Sonnenberg Colourful Gardens and the green corridor along Schloßstraße and Kappelbach.

4. being a city of modernity means that Chemnitz fulfils its social responsibility.
Expenditure on social services and support is once again of particular importance and significance in the municipal budget:

The share of social expenditure in the overall budget has risen in recent years, as has the municipal responsibility for securing the financial livelihood of people without an income.

Almost EUR 110 million is available for social services in the 2008 municipal budget. These include social welfare benefits and housing costs as well as help with raising children in families and youth work programmes.

Some of this expenditure is offset by income from the federal and state governments. Overall, however, it must be noted that it is a major endeavour every year to raise the considerable municipal share.

Social expenditure is important and necessary in order to support those who are dependent on assistance.

However, it is also important to utilise resources in such a way that, on the one hand, the mandatory social services are fulfilled with good quality and, on the other hand, there is still room for voluntary social services in our city.

This means that compulsory social services, particularly in the youth welfare and social assistance budgets, must be organised effectively and economically so that we can provide voluntary services,

• such as the Chemnitzpass,
• the co-financing of the 2007/2008 job initiative or
• the support for volunteers newly included for 2008.

Since the introduction of these laws, the planning of the social welfare and Hartz IV budget has always been associated with great uncertainties. However, the higher expenditure on accommodation costs for benefit recipients was offset in 2006 and 2007 by additional income from federal and state funds.

However, the overall financial relief promised to local authorities before the reforms came into force has not materialised for the city of Chemnitz. Restraint is also necessary at this point, as the federal government's 31.2 % contribution to accommodation costs can be reduced as the number of benefit communities decreases.

In Chemnitz, the noticeable positive changes on the labour market have not led to more employment or more adequate earned income to the extent hoped for. This gives rise to future tasks for state and federal policy.

5. being a city of modernity means: Chemnitz offers cultural programmes for all interest groups as well as absolute highlights and unique items

Culture is "what people make of themselves and their world". We must not forget this: Art and culture can only thrive if they succeed in reaching all generations and social milieus. Education for all opens up access to our culture.

The city of Chemnitz lives in the hearts and minds of many people, especially as a city of culture.

They identify with its cultural achievements.

Chemnitz as a city of modernity is supported by this diverse, moving art and cultural life, which takes place in the spotlight just as much as some things thrive in the shadows.
The fact that Chemnitz's image is changing for the better has a lot to do with the fact that this culture is being discovered in Chemnitz - by the people of Chemnitz themselves and, of course, by our guests.

The draft of the 2008 administrative and capital budget, Section 3, is once again a commitment to this rich culture. The cultural budget comprises 39.7 million euros in expenditure, which is offset by only 13.3 million euros in income. The city's subsidy thus amounts to EUR 26.3 million, which is once again EUR 772 thousand higher than in the previous year.

As of December 2007, Chemnitz is home to one of the largest private collections of classical modern art in Germany. The Gunzenhauser Museum and the Bob Dylan world premiere will reinforce Chemnitz's reputation as an internationally recognised city of art.

The König Albert Museum is also scheduled for completion in 2008. The aim is to celebrate the 100th anniversary of the museum in 2009 in the reconstructed and redesigned building.

The Begegnungen festival, the international film festival "Schlingel", the Industrial Museum and our many, many cultural associations and initiatives are the basis and breeding ground for a modern city of culture.

The municipal theatres are our largest cultural institution. In 2008, they received EUR 7.4 million in cultural funding and incurred expenditure totalling EUR 22.3 million. As in the previous year, the city is thus shouldering its own share of EUR 14.8 million to finance our theatre.
A great financial achievement for an important cultural institution for Chemnitz and the region. I can only hope that the collective bargaining partners see and realise that an increase in this subsidy - also against the background of the declining solidarity pact funds - would hardly be justifiable.

6. to be a city of modernity, i.e. Chemnitz maintains its room for manoeuvre for the future through a prudent budgetary policy

We have had more difficult years, but that is no reason to become reckless and awaken desires that cannot be financed in the long term.

Last year, our tax revenues were higher than the general key allocations for the first time and the trend is continuing.
Nevertheless, 30% of the income from the administrative budget still comes from allocations from the federal state financial equalisation system and the Financial Equalisation Act. Only 32 % are own taxes.

This proportion of own revenue must be at least doubled by 2019. This is because the solidarity pact will then expire - for us, this means that we as a city must stand on our own two feet by then.

The fate of our city is therefore undoubtedly dependent on its economic development, as this is a reflection of the city's tax revenue. But our spending behaviour is also decisive for a future with the ability to act.

Trade tax, as a separate municipal tax, is currently the city's largest source of tax revenue at EUR 75 million. It will be strengthened by the 2008 corporate tax reform.

Due to the tax law changes, a slight reduction in income is still to be expected for 2008. In subsequent years, however, we expect further increases in revenue of between EUR 4 and 5 million.

Income tax revenue, which is the city's second largest tax revenue, has increased steadily in line with economic developments in recent years.

Based on the tax estimate from May 2007, we assume that income tax for 2008 will increase further to EUR 34 million.

This is an increase of over 25 % compared to the 2007 budget.
The slight fall in unemployment figures, the abolition of the homeowner allowance and the reduction in the kilometre allowance are the main reasons for this.
At the same time, a risk to our planning becomes clear at this point: the tax estimate is based on the current legal situation with the reduction in the kilometre allowance from 2008. Further decisions remain to be seen.

Key allocations are developing positively, as are tax revenues. The May tax estimate also showed a significant increase in tax revenue for the Free State. In addition, the financial equalisation settlement for 2006 showed a positive balance.

These additional revenues would only be reflected for the municipalities in the new financial equalisation law - i.e. from 2009. In order to bring forward these increased allocations, the municipal umbrella organisations have successfully campaigned for the revenue increases to be passed on to the municipalities as early as 2008.

According to preliminary information from the Saxon Association of Towns and Municipalities, there will therefore be a change to the financial equalisation system. Our planning is therefore already based on the announced higher allocations, i.e. we expect a total of

• EUR 146 million in general key allocations for the administrative budget and
• EUR 24.5 million in key investment allocations.

Personnel expenditure will rise from EUR 144 million this year to EUR 149 million in 2008 and EUR 154 million in 2011.

There are good reasons for this increase. For example, the 13 new appointments in the fourth quarter of 2006 and further new appointments in 2007 and 2008, which are urgently needed.
In addition, the personnel expenses for 2008 include the 1.5 % adjustment to the East-West pay scale as of 1 July.
We currently have an average staff shortfall of 6 %. This is unacceptable in the long term if we want to provide high-quality work. This is why new recruitment is so necessary in certain areas.

We will not be able to close the gaps completely, but we can defuse the focal points and we will do so if you, dear city councillors, support the increase in personnel costs.

In addition - as I had already announced and which is also reflected in the financial planning - we are planning to discontinue the collective labour agreement - i.e. the 36-hour week without wage compensation - from April 2009. This will at least partially offset the many departures for reasons of age in the years 2007 to 2009.

We are returning to a 40-hour week and will be able to balance our financial plan despite these significant increases in personnel costs. This is a good sign of our increased financial strength. That is the message that comes from the medium-term planning presented and I very much hope that this will remain sustainable. We have already demanded a great deal from the employees of the city administration; I would like to take this opportunity to thank them once again.

An important issue for the future is staff development and training. Showing our own employees prospects, offering opportunities and awakening creativity - this is no easy task in the day-to-day business of an administration.

The project group I set up for this purpose has developed a concept that also takes into account the resolution passed by the City Council in September 2007.
The framework concept for personnel development will be presented to the City Council in the November meeting. The aim is to reach binding agreements on personnel development within a year.

The 2008 budget currently includes central training funds totalling EUR 212 thousand. EUR. An increase of around EUR 70 thousand for 2008 is necessary in order to at least partially cover the needs identified in the development concept. A further increase would be money well spent.

The possible financial and personnel effects of the administrative reform of the Free State of Saxony have not been included in the draft plan. We assume that the Free State will honour its promises and that the intended transfer of tasks will be budget-neutral. Once the necessary data is available, the city's budget will be adjusted accordingly.

My final point and a cornerstone of the 2008 budget is the concept for reducing debt, which is explained in the preliminary report to the draft plan submitted.

In my view, there are several reasons for this long-term concept.

1) It is a requirement of the regional council when approving the budget.

2. the debt limit plays a key role in the assessment of financial capacity.

As a municipality, we will lose room for manoeuvre if we do not reach the targeted EUR 1,000 per inhabitant.


3. EUR 32 million for interest and amortisation in 2006 alone - we can no longer afford such an annual burden in 2019 when the solidarity pact expires.

Or to put it simply: in better times, you should make provisions for the worse.

Our long-term goal, i.e. by 2020, is therefore to reduce debt by a third to EUR 1,000 per capita. This is no easy task, especially with a declining population.

At the same time, we also want to pursue a sound financial policy until 2020 and invest where it is important.

In our medium-term planning, we therefore propose taking out EUR 2 million less in loans each year than we repay.
At the same time, and the budget implementation of recent years proves us right, we hope that we will not have to take out a further EUR 4.9 million in planned annual loans.

Continued until 2020, both measures together would result in a reduction in our loan volume to EUR 229 million. That is a third less than before.

This is an ambitious goal and its realisation will cost us a lot of energy. The concept is not a dogma and will be reviewed annually and adjusted if necessary.

We will still need and be able to take out loans, particularly to co-finance subsidies.

In every public budget, there is always a permanent tension between what is desirable and what is financially feasible. We all know this, which is why we have to ask ourselves the question anew every year:

How do the resources deployed, be it staff, money or buildings, bring the most benefit to the people of Chemnitz?
To be able to judge this, we need clear coordinates and goals.

This applies to our external decisions on which project or investment to realise, as well as to our actions within the administration.

I expressly advocate a sustainable budget policy, i.e. debt reduction in small steps and moderation in the administrative budget, so that we can continue to invest primarily in the renovation of daycare centres and schools and in a modern infrastructure.

I would like to thank the employees of the treasury department and the mayor responsible for preparing the draft budget.

I would also like to thank the employees who are responsible for planning in the specialist departments and for the support of all the mayors.

Together we have put together a solid and sustainable budget for 2008.

Dear City Councillors,
The administration is presenting you with a balanced draft budget for 2008 with a total volume of EUR 658 million. This is EUR 21.2 million more than in the previous year. Our financial plan is also balanced until 2011.

I would ask you to examine our proposals carefully and hope that they will meet with your approval.

Let us work together to pursue a sound and forward-looking budgetary policy so that Chemnitz, as a modern city - a modern city open to development in the best sense of the word - retains its room for manoeuvre.

Bold ideas and sustainable policies result in a concept in which cooperation for the city, cooperation for Chemnitz, takes centre stage.

I invite you, I invite the people of Chemnitz, to be part of it.