Graz budget freeze linked to retroactive disability payment increases

Graz’s budget freeze was apparently triggered in part by higher payments under the Styrian Disability Act, ORF reported on Monday. The amount not previously included in the city’s cash-flow planning has risen to 35.9 million euros, according to Finance Councillor Manfred Eber of the Communist Party of Austria.

A forecast by the city’s disability assistance department in mid-July initially pointed to around 32 million euros in additional payments for the rest of 2026. Internal projections have since raised that figure to about 35.9 million euros.

The city said the main reason was the retroactive adjustment of daily rates for 2026. According to Eber, the Styrian provincial government approved and announced the new rates only in June, forcing the city to amend numerous decisions that had already been issued and pay the resulting differences.

Graz advances the payments and receives reimbursement from the province for around 60 percent of the total expenditure in the relevant legal area in the following year.

A second factor was a backlog from 2025 that was gradually processed during the first half of 2026, partly through additional staff. The city has not yet determined how much of the extra burden resulted from the retroactive payments and how much from clearing the backlog. The responsible department is expected to provide detailed figures in the coming days.

“It is not a single new expense for the city, but a combination of retroactive payments and the processing of existing backlogs,” Eber said. The city government is due to discuss the next steps on Friday.

The Styrian provincial government’s social affairs department disputed the explanation, telling the Austrian Press Agency that it was still “not logical”. It said annual indexation should naturally be included in a budget and was not unexpected. The department also said the 2026 daily rates were decided on April 30, not in June. The city’s reference to June, it said, concerned the 2025 rates, which were set that month because of a provisional budget following the state election in late autumn 2024.