Processes of Suburbanisation and its Effects on the Finances of Cities in West Germany: The Example of Bremen and the Surrounding Communities

Abstract

This paper is an analysis of the effects of suburbanisation processes on the finances of cities in West Germany, taking the metropolitan area of Bremen as an example. The main thesis is that, under the present socioeconomic conditions, the German system of public finance and public responsibilities has led to a growing gap between the financial situations of central cities and of their surrounding communities in urban agglomerations. For the purpose of describing the differences in developments in the central city of Bremen and its suburban area, the main local tax revenues, as well as some indicators of ‘fiscal stress’, and their developments between 1982 and 1992 were analysed. The empirical results verify a significant shift of economic and financial strength to the suburban belt during the period under investigation. Although since the beginning of the 1970s a severe imbalance between the development of revenue and of expenditure needs has generated a dramatic budget situation in Bremen, in the surrounding communities in Lower Saxony budgetaty situations were sound in every respect. Similar processes, which have led to a relative weakness of revenues and increasing debts, have been observed in other central cities in Germany. Obviously the negative effect of suburbanisation processes on the financial situation of the central city is not a problem specific to Bremen. Generally, the larger cities are convinced that their functions for the hinterland and the resulting burdens have not been adequately taken into account in the systems of municipal finance and fiscal equalisation.