Debt brake

State savings package “at the limits of what is feasible”

How will Carinthia find its way out of the financial crisis?

(Bild: Rojsek-Wiedergut Uta)

Carinthia's state coalition of SPÖ and ÖVP has put its heads together to find ways out of the financial crisis. The result: a mega savings package "at the limits of what is feasible". The aim is to "improve the balance" by one billion euros by 2028. The fly in the ointment: debts continue to rise.

Until now, the state budget has always been a one-year issue. And so, at Christmas, the finances for the next twelve months were divided up, briefly discussed and then decided. This time, the coalition wanted to break with this principle in order to be able to plan - and save - for the longer term. And in order to challenge all departments and ministries at the same time, the general target of minus nine percent was postulated.

"From 2000 to 2012, we had a phase in Carinthia where state debt was built up considerably," recapitulates Finance Officer and Deputy Governor Gaby Schaunig (SPÖ). "From 2013 to 2022, the build-up of debt was slowed down." What followed was a pandemic, an economic crisis and a poor mood; a situation that was exacerbated by lower revenues and negotiations on the distribution of funds in the Austrian state that did not go as planned.

"If we had continued as usual, i.e. budgeting from year to year, it would not have gone well," says Schaunig. This is why the savings plan was created. "We've never experienced anything like this before," explains Markus Malle, member of the provincial parliament and ÖVP negotiator: "The current budget is a joint effort by all the speakers." Schaunig: "An intensive process, we didn't make it easy for ourselves and looked at everything. Including all funding and major projects, for example. Really every single item."

"Four-year plan" aims to save one billion euros
The result is a kind of "four-year plan", which is intended to achieve a "balance improvement" of one billion euros. The calculation is as follows: if budgeting had continued as before, the debt level would have risen from the current 4.4 billion to over five billion next year, and even to almost seven billion by the end of this government term. With the savings package, it will "only" rise to a calculated 5.7 billion. So far, so complicated and ambitious.

So has the required nine percent been achieved? "That was a hypothetical approach. But we didn't go over it with a lawnmower," explains Martin Gruber (ÖVP), the state's deputy mayor. Because municipalities, for example, should even be relieved of some of the burden, which is a matter close to the heart of SP negotiator Andreas Scherwitzl, who is also mayor of the municipality of Magdalensberg in addition to his role as 3rd Provincial Parliament President.

Vierjahresplan

Wo wird nun also gespart?

• For major projects such as the B100, the Drautalstraße. They "look over it again".
• When it comes to personnel. The motto here is "minus one percent per year". This is to be achieved through redeployment and "natural departures", i.e. retirements. This is because 1,000 of the current 3,800 state employees will reach retirement age in the coming years. So there will be replacements, but not for every post.
• The renovation of the state government buildings will be postponed.
• Departments in the state government and state companies are being merged.
• The "Regional Health Structure Plan", which is due to be completed next year, will also lead to savings there. For example, with more assisted living, nursing home places for short-term care and thus freeing up expensive hospital beds. And more, which will not be announced until next year.
• With changes to subsidies. The recently discussed reduction in photovoltaic subsidies is described as "very clever" because it should primarily be about self-supply with electricity and not about a private business model.
• However, supposedly minor issues such as additional payments for training courses that are actually mandatory today are also being reduced.

"But what we won't do," all those involved say, "is to make cuts where damage is done. This would be the case, for example, if a subsidy of one euro were to trigger further funding from the state and the EU. Or if roads would fall into total disrepair if they were not renovated. Or when it comes to necessary projects such as the "fifth finger of the hospital".

"No municipality in danger of insolvency"
Further improvements - because the municipality is currently not in a position to reduce its debts, but must continue to borrow money - could only be achieved through new negotiations with the federal government on revenue sharing. A partial success in this respect will also relieve the municipalities. Scherwitzl speaks here of 22.5 million euros and also explains that "no municipality is in danger of insolvency". And that it will stay that way.

The bottom line: the financial situation is serious and remains serious. And only the details of the "four-year plan" will show whether at least the goals that have now been set will be achievable.

What happens next? With talks with those affected, then a government meeting on November 12th, the annual budget presentation in the Carinthian state parliament on November 14th and finally, after what is sure to be a series of political discussions, the resolution at Christmas time from December 18th to 20th.