Digitalization and cooperation – municipalities should include these measures in their budgets

With digitization measures and cooperation, municipalities can save considerable costs and personnel in the long term. Even if money is tight at the moment, the costs should be budgeted for now.

The fourth quarter is the quarter of budget discussions in local authorities. In meetings lasting hours or even several days, voluntary municipal, city, district and county councillors pore over the figures, discuss priorities and wishes and forge compromises. The waiting begins with the budget resolution: the first quarter is the quarter in which the budget is approved by the legal supervisory authority. This year, many treasurers are looking forward to the supervisory authority’s decision with great concern. The deterioration in the overall economic situation following the various crises is leaving its mark on municipal budgets. According to the current 167th tax estimate, the federal government, federal states and municipalities will have to forgo around 58 billion euros in tax revenue by 2028 compared to previous expectations. In the individual municipalities, the financial situation is closely linked to the financial situation of their trade tax payers.

Countering the shortage of skilled workers with collaborations

When funds are tight, local authorities have to weigh up their options. In addition to the mandatory tasks that are privileged under budgetary law, there are numerous so-called voluntary tasks that are often just as urgent. Another problem is the growing shortage of skilled workers. A third of administrative employees will retire by 2030; up to 1.6 million skilled workers will then be missing. This loss of capacity and expertise cannot be compensated for by simply increasing the workload of the remaining workforce. In order to maintain the efficiency of the public sector, local authorities should ask themselves: Do we as an administration have to do everything ourselves and alone? Where can we cooperate more with other public bodies and join forces? Personnel and resources can be saved, for example, by

• joint service center for making appointments,
• Joint data centers/joint IT companies,
• Joint facility management for public institutions,
• Cooperation between hospitals.

Private companies can also provide support, for example as an “extended workbench” for

• Telephone switchboards for appointments,
• Reviewing applications in mass procedures, for example for funding applications, refund applications and the receipt of tax returns for municipal levies.

The associated legal issues can all be resolved, from cooperation between different levels to the legal form and the need for tendering.

IT tools can speed up and simplify many processes

However, the greatest opportunity lies in the digitalization of processes and services. AI-supported tools can check extensive approval applications for completeness in just a few minutes instead of several hours of individual work. The scarce staff can concentrate on the relevant work steps. IT tools can be part of the solution, especially when there is a high volume of applications or to catch up on processing backlogs. Other conceivable use cases are

Standardized contract management for all properties

A tool records contract features for more detailed categorization and evaluation, compares them with desired contract standards and calculates notice periods and other deadlines.

Preparation of notices and contracts and preliminary review of permit applications

AI tools can, for example, process benefit applications for medical services in social insurance or record subsidy matters for civil servants and create drafts for notifications.

Research on the legal situation

AI-supported tools for judgment and literature research in specialist databases can be used for research.

Model hospital sector

In the hospital sector, the federal and state governments have significantly advanced digitization with extensive digitization funding under the Hospital Future Act and threats of penalties in remuneration. The funding period expires at the end of the year. An entire sector is thus becoming visibly more digital and more secure and efficient thanks to the interlinking of systems. This impressive nationwide digitalization push has not yet been achieved in the municipal sector with its diverse tasks and numerous specialist applications. The dynamics in the hospital sector can and should serve as a role model here, both in terms of funding and implementation.

Plan projects for digitalization and cooperation in the budget

Transformation projects for more cooperation and digitalization should now be anchored in the budgets. Even if the budget is limited and staff for additional projects is scarce: with cooperation and digitalization measures, municipalities can secure their performance in the long term and deploy their staff even more precisely and economically. It would be fatal to miss out on the opportunity for long-term transformations and the associated relief from a one-off perspective. In the long term, these transformations will be the key to an approvable budget.