Hagen Faces Budget Constraints: Consolidation, Deficits, and the Future of the City Budget

Budget Constraints and the Search for Balance in Hagen

The city of Hagen has been in a strained financial situation for several years. Structural budget deficits and a debt burden that has been evident since 2013 have compelled the administration and the Council to engage intensively with consolidation. Hence, in March 2026, the planning of the double budget for 2026/2027 and the implications of budget consolidation were at the center of public debate.

Deficits in the Millions and Consolidation Pressure

The draft budget for 2026/2027 clearly shows significant deficits: 91.66 million € in 2026 and even 107.60 million € in 2027. The causes include rising personnel costs, inflation, collective labor agreements, and the loss of accounting aids related to the pandemic. Additionally, high interest rates are placing a burden on the budget.

To reduce these deficits, a consolidation volume of 19.966 million € is planned for 2026. Of this, 12.966 million € is intended for non-personnel cost savings and 7 million € for personnel cost savings. These measures are part of the budget stabilization concept (HSK), which is required due to structural deficits under § 76 of the North Rhine-Westphalia State Administrative Code (GO NRW).

The originally planned budget equalization strategy for 2031 has been postponed to 2034, indicating the severity of the financial situation.

Debt Relief as a Ray of Hope

A key milestone for Hagen is the debt relief provided by the ASEG NRW amounting to 543 million € in 2026. This amount reduces liquidity loans and provides the city with some breathing room. However, this is only part of the solution—the structural problems remain.

In addition, grants and levies amounting to 394.881 million € are flowing into the budget. These funds come, among others, from EU funding, state programs, and third-party funding, although the city is still required to implement cost-saving measures in this area.

Investments and Digitalization: Costs Instead of Revenues

In 2026, investments amounting to 11.3 million € are planned. The focus is on expanding the WLAN network, digitalization, IT security, and equipping schools. However, the overall investment balance remains negative, indicating that investments currently do not contribute to revenue growth but instead represent additional burdens.

Digitalization measures, particularly in the administrative sector, cost more than they generate, which is evident in ongoing administrative operations. The costs for IT security, data protection, and audits remain at a high level.

Rising Personnel Costs – Cost-Cutting Obligations Remain

Personnel costs are another key topic. They are rising from 228.985 million € (2024) to 271.606 million € (2030). This increase is explained by collective labor agreements and a workforce of over 3,800 employees. At the same time, structural cost-cutting measures are necessary, which is why the city implements targeted personnel cost reductions starting in 2026.

In addition, the workforce will continue to grow until 2030, further burdening long-term financial planning. The city must balance service quality with financial sustainability in this regard.

Outlook: Consolidation Until 2034

The city of Hagen has set itself the goal of achieving a balanced budget again by 2034. Therefore, consolidation measures must be continuously pursued. Although the budget balance will be achieved later than planned, the groundwork has been laid.

The city is implementing cost-saving measures in areas such as administration, IT, and fire and disaster protection. At the same time, projects are being reduced or canceled, for example, in the areas of subsidies or honoraria.

Conclusion

The budget situation in Hagen remains tense. The deficits in the millions, rising personnel costs, and the cost-cutting imperative clearly show that the city is in a transitional phase. The debt relief from NRW offers short-term relief, but long-term sustainable consolidation is necessary. With the adoption of the double budget for 2026/2027 and the orientation toward 2034, Hagen will have to prove in the coming years whether the financial planning is robust enough to lead the city into a stable future.