“The safe is empty,” warns Kraków after city’s debts double in four years

Jul 31, 2024 | Business, Politics

The municipal authorities in Kraków say that the city, Poland’s second largest, is in financial crisis after its debts doubled in four years. They have blamed the longstanding former mayor, who left office in May. There are now concerns over how teachers and public transport workers will be paid this year.

“Colloquially speaking, the safe is empty,” deputy mayor Łukasz Sęk told news website Interia. “Kraków is in the most difficult financial situation of all large cities [in Poland].”

Interia reports, based on its analysis of the city’s finances, that Kraków’s debts now amount to almost 6 billion zloty (€1.4 billion), up from 3 billion in 2020. But it notes that that figure is still “optimistic” because it does not include the debts of municipally owned companies.

The city currently lacks funds to cover this year’s budget, which was prepared and adopted under the former mayor, Jacek Majchrowski, who ruled the city from 2002 until this year. It needs to find at least 600 million zloty by the end of the year, mainly to cover the salaries of teachers and bus and tram drivers.

“This year’s budget, which we are implementing, is a legacy from Jacek Majchrowski,” said Sęk. “He and his people prepared this document. What we can do is correct certain things.”

However, Michał Drewnicki, a city councillor from Law and Justice (PiS), the main opposition party both nationally and on Kraków city council, notes that councillors from Civic Platform (PO), the main ruling party nationally and in Kraków, supported Majchrowski, an independent, during his rule.

“It is not only Jacek Majchrowski who is responsible for this, but also PO,” said Drewnicki. “Today, the current authorities pretend that it was the previous team that put the city in debt. But Majchrowski never had a majority on the council…and PO councillors supported these budgets.”

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When the current mayor, Aleksander Miszalski of PO, took office in May he immediately ordered an audit of the city’s finances. Earlier this month, he announced that it had found numerous problems, including the duplication of functions between different municipal offices.

“When it comes to finances, money is not properly guarded in the city,” said the mayor, quoted by local news website LoveKraków. “We have diagnosed problems, now we need to impose solutions. Changes will take place from the beginning of the new year.”

Among the steps Miszalski has already announced are giving his office stronger oversight of municipally owned companies and hospitals, as well as over tenders.

“Any new investment that is to absorb a larger sum of money must now receive the mayor’s approval,” said Sęk. “If a new task is to be started, there must be a justification as to why it is important.”

Dominik Jaśkowiec, a PO member of the national parliament, notes that the central government in Warsaw may also provide support. It has already been preparing a bill reforming the financing of local authorities that would include an additional 200 million zloty for Kraków.

But he adds that the city, which had a “very lax approach to financial discipline [under] the former mayor”, will also need to make savings, including postponing some investments.

Last year, Kraków and the surrounding Małopolska province hosted the European Games, a continental athletics competition, at a cost of 400 million zloty. The event had initially been in doubt due to concerns over financing. But an agreement was reached to share the costs with the national government.

Main image credit: MPK SA w Krakowie

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