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German Cities Face Record Deficits in 2004

The combined deficit of German cities such as Frankfurt and Hamburg will rise to a record high in 2004 because of the financial burdens politicians have placed on them, the DSTGB association of local authorities said. The shortfall will probably rise to €10 billion ($12.6 billion) from the previous record of €9.7 billion in 2003 as spending on social welfare increases 4.6 percent after a 7.7 percent rise last year, according to Bloomberg. Mayors are being forced to cut back on city services and close facilities as deficits widen amid slow growth and persistent unemployment. Petra Roth, the mayor of Frankfurt and DSTGB president, urged Chancellor Gerhard Schröder and state leaders to keep their promise to shoulder €2.5 billion in costs for social welfare recipients. "The diagnosis is well known but the federal government and the states keep postponing the therapy," said Roth. She added that many German cities have “their backs to the wall.”