Graz funding freeze could bring legal consequences for politicians

The city of Graz has suspended the processing of new funding applications because of its financial problems, a decision that could also have legal consequences for politicians, according to ORF.

The suspension was ordered by Finance Councillor Manfred Eber of the Communist Party of Austria and Finance Director Johannes Müller. It applies to new funding and purchasing decisions.

Hans-Georg Windhaber, head of Graz’s audit office, said the measure was not surprising. The office had warned for years that the city’s financial situation was precarious.

Graz business lawyer Harald Christandl said those warnings could lead to civil and criminal reviews of decisions by city politicians. If audit bodies, the Court of Audit and auditors had repeatedly pointed to financial risks and funding needs, he said, politicians had to respond in time and keep spending under control.

“I cannot ignore warnings for years and still draw up a budget,” Christandl said. He added that the issue should be legally examined if the situation went completely wrong, including if a new city government took office while already close to insolvency.

The freeze is currently scheduled to remain in place until the end of next week. Windhaber said it was likely to continue at least partly afterwards, because the city needed to find 65 million euros in savings over the next 18 months to two years.

He said such savings could only be achieved in the short term through voluntary services. A decision by the city of Graz is expected at a government meeting at the end of next week.