I present to you my draft supplementary budget for 2018 and my draft budget for the 2019 and 2020 financial years, including the budget for the municipal enterprises in accordance with the respective business plans. For the first time in my 12 years in office, I am presenting a so-called double budget, which was requested by the Council following discussions in the Council of Elders and the Finance Committee. With regard to this premiere, I would like to point out that the expected advantages of a
budget - such as the greater planning security mentioned and the ability to act more quickly in the second financial year - are also offset by disadvantages. It is obvious that planning for the second year in particular, i.e. 2020, will be subject to greater uncertainty. This is because despite meticulous planning in 2018, the probability of a supplementary budget being drawn up in the
in the 2020 financial year.

Let's wait and see and assess this as part of the 2021 budget preparation process.

Ladies and gentlemen,

Let me first explain my draft of the 1st supplementary budget for 2018 before I go into the most important key figures of my draft of the 2019/2020 bi-annual budget. Following my introductory speech, Councillor Neiseke will briefly supplement my basic statements with a financial section.

The need to prepare the 1st supplementary budget for 2018 is mainly due to the EUR 58 million drop in planned trade tax payments. In fact, only EUR 42 million of the originally expected EUR 100 million can be realized in 2018. My own estimates at the time of
at the time the 2018 budget was adopted, that the profit expectations of some of our major trade tax payers would normalize will unfortunately be more hesitant than originally forecast.

In addition, an unexpected expense had to be planned due to a significant purchase request for extensive commercial space in the Beddingen industrial estate. The background to this is that the achievable purchase price will be lower than the value assumed in the balance sheet and this will lead to an impairment loss.
value adjustment. Due to the considerable difference between the price per square meter that can be achieved on the market for commercial land and the acquisition and development costs incurred for this land overall, this results in extraordinary expenses of EUR 3.35 million.

In addition, the 1st installment of a needs-based
EUR 3 million paid by the state as well as the financial consequences of the trade tax slump on the trade tax levy, key allocations and trade tax interest.
interest on trade tax.

As a result, the previously planned surplus of EUR 1.01 million will be "eaten up" by an overall deterioration of EUR -42.63 million, leading to a deficit of EUR 41.62 million.

I took the dramatic slump in trade tax in 2018 as an opportunity to drastically adjust the trade tax estimates downwards in the financial planning for 2019 to 2023.

The original forecast for the years 2019 to 2023 was a total deficit
of EUR -37.35 million was originally planned for 2019 to 2023, which
EUR -128.29 million to EUR -165.64 million as a result of the slump in trade tax.
million.

This completely unacceptable development had to be decisively and sustainably counteracted when drawing up the draft 2019/2020 double budget. And I did this with my administration - in some cases with painful cuts.

The overall deficit of the 2019/2020 dual budget for the years 2019 to 2023 was reduced to EUR -76.15 million thanks to extensive improvement measures totaling EUR 89.49 million.

If the uncovered refugee costs of EUR 86 million in the years 2019 to 2023 were fully covered by the state, there would even be a surplus of EUR 9.86 million in this period.

Ladies and gentlemen,

In the profit and loss account, this means that we will actually be able to
to reduce our city's debt by EUR 620,000 from 2023. If the uncovered refugee costs were fully reimbursed by the state, this would already result in a debt reduction of EUR 2.4 million in the operating budget in 2021, which could be increased to EUR 11.4 million in 2022 and EUR 18.38 million in 2023.

In the investment budget, my consolidation measures will even lead to a debt reduction of EUR 19.7 million in total over the five-year period just mentioned. in the amount of EUR 19.7 million in total.

This is the "bare" numerical result of intensive administrative work in recent weeks, which is quite impressive in purely numerical terms.

Instead of an additional deficit of EUR -38.36 million, there will be a surplus of EUR 9.86 million at the end of the 2023 financial planning period - taking into account the full reimbursement of refugee costs by the state from a purely mathematical perspective. It is true that this full reimbursement of costs by the state has not yet been promised. On the contrary: we are even still arguing about the extension of the special pot set up by the state for 2017 and 2018 for municipalities particularly affected by secondary migration, which - as I said in October 2017 - is just a drop in the ocean.
is just a drop in the ocean. This 2018/2019 double budget is a litmus test as to whether the state is willing to help the city of Salzgitter sustainably through a "Lex Salzgitter" due to its unique national burdens. But more on that later.

Ladies and gentlemen,

It should be clear to everyone that the complete absorption of the
years of falling trade tax revenues in the order of around
of around EUR 58 million per year over the years cannot be
can be fully absorbed. Nevertheless, in
intensive administrative consultations in the medium term
based on the state's orientation data for the coming years from
the next few years from 2023.

But what does this numerical success mean for the citizens, clubs, associations and institutions as well as the companies in our city?

The fact that this could not happen without painful cuts
could be made without painful cuts.

First the good news:

I have not planned any cuts to voluntary services, which are indisputably the glue that holds our urban society together and makes life in Salzgitter worth living. The voluntary subsidies to social organizations, health facilities, cultural institutions and sports clubs will be maintained. We are not indulging in any luxury here, but rather maintaining voluntary structures that are vital to the city's society.
upheld.

I have also not planned any cuts in personnel. As you all know, there are already vacancies in many areas of the city administration because there is a shortage of skilled workers in Lower Saxony. This applies in particular to engineers, technicians,
social workers, professional firefighters, paramedics, but also administrative staff. Cutting back here would jeopardize the proper execution of tasks. Nevertheless, in the event of a successful task review, jobs will also be cut or not created. In other words: where we get rid of tasks, the jobs that are no longer needed will also be cut. And we have to take a close look and decide whether it is desirable from a municipal policy perspective to take on additional tasks in view of the dramatic budget situation.
tasks is really justifiable in view of the dramatic budget situation.
is really justifiable. One example of this is the introduction and
of the "volunteer card" or staff for "video and audio recordings at council meetings".

I have a lot of additional job requests from my administration in
areas that would be desirable, but are not absolutely necessary, in this double budget. But then the additional tasks associated with this are not carried out. It goes without saying that I will provide the posts that are absolutely necessary, e.g. due to the Federal Maintenance Advance Act (around 3 posts), the Federal Participation Act (7 posts) or the increase in the number of cases in FD 51 (almost 12 posts).

I have also not proposed the sale of the "silverware". We still own 49.78 % of the shares in WEVG Salzgitter GmbH & CO. KG, 5.1 % shares in Helios Klinikum Salzgitter GmbH, 70.32 % shares in Wohnungsbaugesellschaft mbH Salzgitter and 0.39 % shares in Avacon AG.
in Avacon AG. On the one hand, we would forego the annual profit distribution. On the other hand, there is a risk that municipal control options in vital areas of public services could be lost.

I have also not proposed the introduction of a new tax, such as the horse tax or the second home tax, which would essentially affect our students at Calbecht University of Applied Sciences. Not to mention that I would categorically reject a municipal beer tax.
would be categorically rejected. But fortunately, a municipal beer tax has not been legally possible for a long time.

What am I trying to say with this list and this humorous reference to a beer tax?

I have really put everything to the test in order to avoid the increase in real tax rates on 01.01.2019. The dramatic drop in trade tax revenue over the next few years and the need to
municipal services of general interest in many areas such as crèches, daycare centers, schools, scientific facilities, fire protection and rescue services, urban development, business development and leisure facilities as well as the
economic development and leisure facilities, as well as
However, ensuring the efficiency of my administration forces me to do so.

The increase in real tax rates is also justified by the fact that the last tax increase was decades ago. In detail:

• Property tax A was last increased on 01.01.1996,
• property tax B was last increased on 01.01.1996 and
• trade tax was last raised on 01.01.2002.
  2002.

I therefore propose that the real estate tax rates, which have been well below the state average for years, be raised to or slightly above the state average in 2018.

In detail:

• Property tax A from 350 v.H. by 40 v.H. to 390 v.H., state average property tax A 390 v.H.
• Property tax B from 430 v.H. by 110 v.H. to 540 v.H., state average property tax B 526 v.H.
• Trade tax from 410 v.H. by 30 v.H. to 440 v.H., state average trade tax 446 v.H.

In making this decision, it was important for me to signal my unconditional willingness to consolidate to the state of Lower Saxony on the one hand, but on the other hand to implement the most moderate tax increase possible. The fact is that, unlike the vast majority of other municipalities in Lower Saxony, the City of Salzgitter has not increased its property tax since 1996 and has not increased its trade tax since 2002.
trade tax increase since 2002. A further
further tax increases would mean a permanent loss of revenue, which I can no longer maintain due to the dramatic financial development of the City of Salzgitter. In addition, the city of Salzgitter is financially penalized in the financial equalization system - an extremely difficult construct - due to its comparatively low
municipal assessment rates, because municipalities comparable to us have implemented significant increases in recent years, especially in 2016/2017. Councillor Neiseke will explain this system, which has been disadvantageous for us to date, to you after my introductory speech.

I would like to expressly emphasize at this point that this landmark decision was not an easy one for me:

Our companies - as we all know, ladies and gentlemen - make a valuable contribution to the well-being of this city not only through their tax payments, but also by providing jobs in Salzgitter and our region. And our citizens should not be unduly burdened. That's why, before I made my decision, I had it explained to me what the proposed
tax increases will mean for those affected. Due to tax confidentiality, I am not allowed to be more specific here, but
but I can at least tell you the following:

In the corporate sector, the increase in trade tax means that our "top 5 trade tax payers" would have to make around EUR 590,000 more in advance trade tax payments each year, all things considered (!). Our "top 3 business tax payers among the small and medium-sized companies would only have to pay a total (!) of around EUR 16,000 more per year. Certainly, there will be an additional burden on companies. In my opinion, however, it is acceptable for the companies concerned on the one hand, and on the other hand it is the equivalent of maintaining and creating infrastructure measures and measures to secure the demand for skilled workers, which is in itself a matter for the employment service. But in the interests of the cause, everyone is pulling in the same direction here.

In the area of property tax B - i.e. for property owners - the draft resolution provides for an increase from 430% to 540%. At first glance, this seemingly high increase of 110% is based on sound reasoning, however, as it only slightly exceeds the weighted average rate of 526% for the municipalities of Lower Saxony according to the State Statistical Office. This means that Salzgitter is roughly on a par with the city of Hildesheim and is still below the rates of the city of Göttingen (590%) and the state capital of Hanover (600%). Certainly:

Braunschweig (500 v.H.) and Wolfsburg (450 v.H.) are below my proposed figure, but do not have anywhere near as sobering a financial situation as Salzgitter. An overview of the specific additional annual financial burden for our property owners is naturally difficult, as the levying of property tax B is based on the amount of land owned, which of course varies from person to person.

In individual cases, the additional monthly burden will amount to between around EUR 5.00/month and EUR 16.00/month. I am firmly convinced that this additional burden is bearable in each individual case, but that it is also justified in view of the municipal services that the city of Salzgitter provides for its citizens.

It is important for me to emphasize at this point that in recent years, considerable municipal funds have flowed into a large number of areas from which the citizens of Salzgitter have also benefited in the long term. This should remain the case in the coming years.

These include the school renovation program, the construction of an IGS in Salzgitter-Lebenstedt, the pollutant screening program in schools, voluntary school social work, the construction, conversion and renovation of crèches and day nurseries, securing and expanding the Calbecht University of Applied Sciences, ensuring fire protection and rescue services, the development of building areas in conjunction with the resettlement of new residents, the development and marketing of commercial areas, the urban redevelopment measures in Salzgitter-Lebenstedt and Salzgitter-Bad, the Social City measures in Salzgitter-Lebenstedt, Salzgitter-Bad and Salzgitter-Steterburg, the expansion of leisure facilities, particularly in the
(both at BSF and at Thieder Bad GmbH and Glück Auf Gebhardshagen) and at Salzgittersee, great play experience worlds used throughout the city and - admittedly too small in scope - road renovation measures, road expansion measures
and cycle paths.

There are also important investments to be planned and carried out in the coming years, which will be financed at least indirectly, with depreciation but also ongoing expenses, by increasing the real tax rates. These include
for example, the continuation of the complete refurbishment of IGS Amselstieg, which is estimated to have a construction volume of EUR 1.8 million in 2019/2020 alone. The continuation of the refurbishment of Salzgitter Bad grammar school, for which around EUR 3 million has been budgeted in 2019 and around EUR 2.2 million in 2020, in addition to the refurbishment of the grammar school auditorium, which, however, will be largely

is subsidized via KIP funds (total volume EUR 4.2 million). Around EUR 2.9 million has been budgeted in 2019 for the further expansion of the daycare centers, for the "Rasselbande" daycare center alone for the 3rd after-school group, the expansion of the Salder daycare center, the expansion of the Grundschule am See elementary school and the construction of the new Ringelheim daycare center. For the urgently needed measures in the
The business plan for EB 85 provides for around EUR 1.5 million in 2019 for urgently needed measures in the area of pollutant screening and the implementation of preventative fire protection measures, and EUR 1 million for the equally important task of school inclusion.

For the fire department, a volume of EUR 1.1 to 1.2 million has been budgeted for the annual procurement of new vehicles over the entire planning period.

This list is by no means exhaustive; a presentation of the
This list is by no means exhaustive; a presentation of the aggregated investment sums, which better illustrates the total volume, will be presented by City Councillor Neiseke in his subsequent remarks. Irrespective of the refugee expenses, the income budget also includes a large number of important measures that also have to be covered by the budget with the associated expenses.
must also be covered by the budget. The Sozialticket, which has just been approved by the Council and will involve ongoing expenses of between EUR 650,000.00 and EUR 850,000.00 per year from 2019, is immediately apparent to me. The social pass approved by the Council will also place a
also place a permanent financial burden on the municipal budget. However, other decisions made by the council that are definitely in the interests of the citizens, such as the implementation of the 3rd employee in the nursery sector, have also increased the financial requirements.

But if we continue to take the necessary measures in these areas
If we want to continue to guarantee the necessary measures in these areas to ensure the provision of services of general interest and make the city more attractive, which therefore directly benefit our citizens, I see no other option than to finance this in the long term with the current increase in real tax rates.

Ladies and gentlemen,

A very important message for me at this point is that
our refugee costs were not a reason for me to propose the tax increase. Here I want to unequivocally
counter any possible reservations. Because when it comes to
I still expect the state of Lower Saxony to reimburse the full cost of refugee expenses, which I will discuss later.

Ladies and gentlemen,

I can assure you, however, that in my opinion these still moderate increases in the aforementioned real tax rates represent the last possible way to counter the financial imbalance of the city of Salzgitter with a sustainable measure and guarantee reliable additional revenue.

You, as councillors, and I, as Lord Mayor, must live up to our responsibility towards the city of Salzgitter. In case of doubt, this also means having to make unpleasant decisions for the benefit of our city.

Ladies and gentlemen,

This once again confirms my view and I will never tire of emphasizing that the city of Salzgitter does not have a spending problem, but a revenue problem. In addition to a highly volatile trade tax, our main problem lies in the considerable structural underfunding in the fulfillment of state tasks.

However, with my 2019/2020 draft budget presented to you today, which includes the aforementioned tax increases in addition to our ongoing savings efforts, we can work together to continuously reduce the deficits and actually even work towards reducing the accumulated deficits again from 2023. This goal, the reduction of the debt situation,
must be one of the most important goals for our city,
without saving ourselves into the ground. With immediate and sustained state support for refugee costs, we could even start reducing the deficit as early as 2021.

Ladies and gentlemen,

The influx of refugees, especially the influx of children and young people, is accompanied by increased demands on the school infrastructure. The business plan of Eigenbetrieb 85 (facility management, purchasing and logistics) includes three important measures for the necessary expansion of classrooms alone. In detail, these are
Dürerring SZ-Lebenstedt elementary school - expansion by 4 general classrooms, Ringelheim SZ elementary school - expansion by 4 general classrooms and Salzgitter Bad grammar school, Helenenstrasse building
Helenenstraße - refurbishment of sanitary facilities and new construction of 6 general classrooms with ancillary rooms - a total of around 5 million euros will have to be raised over the years for these 4 measures. We will apply for funds for these measures from a corresponding funding pot of the state of Lower Saxony; in my opinion, they are indispensable for maintaining a functional school infrastructure. The refurbishment of the secondary school auditoriums, which you are aware of and which must be tackled more intensively in 2019, remains one of my central projects with a total investment volume of €8.4 million, of which around
of which around 7.3 million euros will be subsidized from KIP II funds.

For further investments in the years 2019-23, it was also my
urgent request was not to allow any further net new borrowing due to the precarious financial situation in the operating budget described to you. As I mentioned earlier, my budget protection concept for investments now even shows debt reduction for all planning years.
years, which adds up to a total of 19.7 million euros. In my view, the budget contains only the most necessary measures. Even in the area of the construction of new daycare centers, only cautious funds have been budgeted.
have been budgeted. I also want to make it clear that
that even in the case of the most important measures, we must now ask ourselves the question: Is this expenditure absolutely necessary? From my point of view, I would like to ask this question here using a project such as the Seepromenade infrastructure measure as an example. Or the conversion and expansion of the Lebenstedt indoor swimming pool with originally planned costs of EUR 14 million - a project that has already been approved by the council majority.
that the liquidity reserves of our VVS (Versorgungs- und Verkehrsgesellschaft mbH)
(Versorgungs- und Verkehrsgesellschaft mbH Salzgitter), which in turn results in follow-up costs and places a long-term burden on our budget with higher loss compensation payments. Councillor Neiseke will explain these financial links and effects in more detail in a moment.
effects in more detail in a moment.

I will just say this much: I am not asking this question out of political calculation, because in my opinion these measures certainly have the potential to contribute to improving the living situation in our city. But ladies and gentlemen, given our financial situation, are we still living up to our responsibility with such luxury projects, which a financially strong municipality can certainly afford?

I think so: No!

Ladies and gentlemen,

Let me conclude by making it unmistakably clear once again that, despite the strictest consolidation measures and an increase in real tax rates, we will not be able to significantly reduce our debt on our own.
debt reduction on our own. On the contrary, we must expect cost increases in the tasks transferred to us by the state or federal government or even new mandatory tasks within the scope of the transferred sphere of activity. Who would have guessed, for example, that the city of Salzgitter would be entrusted with the long-term integration of refugees more than any other city in Lower Saxony?

Together, we can be proud that we have managed this task well so far. Nevertheless, the 2019/2020 double budget that I presented shows that we are still faced with a delta between the costs of integrating refugees that need to be paid and the costs reimbursed by the state of Lower Saxony. A continuation of the integration fund and thus also the support of the city of
Salzgitter, as we experienced in 2017/2018,
can now also be expected for 2019. This is thanks to the joint and enormous efforts of myself, our members of state parliament Stefan Klein and Marcus Bosse and the President and Managing Director of the Nds.
Städtetag, Lord Mayor Ulrich Mädge and Mr. Jan Arning. I would like to take this opportunity to thank you, Stefan, and the other supporters once again, but I would ask you to campaign vehemently for full reimbursement of the costs of integration tasks.

We did not receive the EUR 11 million originally promised by the state for two years (2017 and 2018), but just under EUR 9.5 million as special funding for the integration of refugees. Even further state support of around EUR 5 million in 2019 is nowhere near enough to cover the annual uncovered refugee costs of around EUR 17.2 million per year - i.e. EUR 86 million for the period from 2019 to 2023.

We don't need another drop in the ocean, we need the state to cover the full costs immediately, especially in order to ensure social peace on the ground. For me, financing this extraordinarily high shortfall in a state task from municipal funds is categorically out of the question, both in principle and in view of our dramatic budget situation.
out of the question.

I have therefore once again reported these costs separately in the 2019/2020 double budget and expect the state of Lower Saxony to

1) that the municipal supervisory authority of the Lower Saxony Ministry of the Interior continues to approve this approach in the budget approval process,

2) that the state government and the state parliament allocate the EUR 86 million
EUR 86 million for the integration tasks of the city of Salzgitter
and

3) that the state government and the state parliament make a further EUR 100 million or so available to the city of Salzgitter in order to purchase the 3,000 apartments of private real estate companies or hedge funds that are still empty and in a catastrophic condition and
and demolish most of them. Although only a small number of refugees are currently moving into these apartments - due to the rightly imposed negative residency requirement - an increasing number of transfer benefit recipients from large cities and neighboring towns and municipalities with a high housing shortage and from Eastern European EU states are moving in. I therefore personally approached Minister President Stephan Weil again in June 2018 and asked him to provide the urgently needed state aid.

I am counting on our Minister President and our members of parliament on this issue, as Salzgitter is at a crossroads due to the financial situation, which also makes me personally very concerned about the peaceful future of our city. The necessary political state decisions on this issue will
will point the way for our city.

Why not a "Lex Salzgitter" after the state of Lower Saxony has also granted other cities such as Cuxhaven and Wilhelmshaven a considerable amount of debt relief in the hundreds of millions? The fact that Salzgitter fulfills all the prerequisites for this is revealed by the fact that the state of Lower Saxony has made target agreements with us, which we have
which we have always complied with to date.

Ladies and gentlemen,

I wish you every success with your upcoming budget consultations. With my draft of the 2019/2020 dual budget, I have provided you with a tool that we can - and should - use to tackle and, in my opinion, overcome the pressing challenge of our budget situation.

Councillor Neiseke will now expand on my comments in a financial section and explain them in more detail.

Thank you very much for your attention!