Stabilization aid

The City of Hof would like to submit another application to the Bavarian State Ministry of Finance and Home Affairs for the granting of stabilization aid for 2024.

This is the result of the city council meeting on 15.01.2024. The decision was preceded by talks at the aforementioned ministry, in which Lord Mayor Eva Döhla and City Treasurer Peter Fischer took part.

According to the ministry, the following requirements must be met by the city of Hof in order to have a chance of receiving further stabilization aid:

The budget consolidation concept, which the city of Hof had drawn up in 2011 and updated and supplemented annually, must be fundamentally redrafted. To this end, consolidation measures must be developed and comprehensively presented. In addition to new savings opportunities or additional income, measures already taken that have led to a limitation of expenditure also represent a contribution to budget consolidation. These need to be evaluated and further optimized. Another starting point will be to prioritize expenditure in the capital budget. Ongoing considerations, reviews and consultations in the city council will also be included in the concept.
The revenue situation must be improved in a tangible and valuable way. This applies to fees in all municipal areas. An improvement can also be achieved by increasing the assessment rates for property and trade tax. This is also being reviewed.
The voluntary services and facilities outside of the original mandatory municipal tasks are to be reviewed with regard to further consolidation and savings potential. The largest expenditure items here are the theater and the Freiheitshalle. The aim must be to reduce the total amount of voluntary services.

The will of the city of Hof to further reduce its debt must also be demonstrated. To this end, unplanned additional income in 2023 must be used to avoid taking out loans that have already been approved. This also applies to the years 2025 to 2027.

Mayor Eva Döhla emphasizes: "The talks with the representatives of the ministry have been very cooperative. We are now discussing the way forward and the necessary measures in detail in the city council. This is a major task that we will all tackle very responsibly together. After that, I am confident that we will be able to build on the good discussions with the ministry to submit the most effective application for stabilization aid for 2024."

Background information

For the years 2021 and 2023, the Free State of Bavaria, represented by the Government of Upper Franconia, rejected the City of Hof's applications for stabilization aid in accordance with Art. 11 of the Bavarian Financial Equalization Act on 21.12.2023.

For the year 2021, the Free State of Bavaria justifies this with the fact that the City of Hof took out more loans for investments in the wastewater sector than it actually had to spend in this area. It acknowledges that this borrowing was necessary under budgetary law in order to avoid a loss of credit approvals. However, these budgetary considerations could not be taken into account in the context of stabilization aid. The requirement that there should be no net new borrowing was therefore not complied with by the City of Hof.

In the opinion of the Free State of Bavaria, the conditions of "financial hardship", "structural hardship" and "restriction of borrowing" were met in terms of numbers for the granting of stabilization aid in 2023, but the city of Hof had not provided proof of the necessary budgetary consolidation.

At its meeting on 15.01.2024, the City Council of the City of Hof decided by a majority that no legal action would be taken against these decisions by the Free State of Bavaria.