Legislation assembly or Law-making body - Additional budget faces disapproval from state parliament opposition
The forthcoming Hessian supplementary budget, amounting to a billion dollars in additional debt, has encountered vehement objections from the state opposition. Miriam Dahlke, the Green party's parliamentary leader, expressed her concerns in Wiesbaden on Tuesday: "This addendum won't bring anything good for the near future and years to come, but it's pushing Hesse into a budget crises." She believed the state government was setting misplaced priorities. "The black-red coalition is funding expensive, ineffective, and inequitable election gifts, like the Hessengeld, amounting to two billion euros until 2037, as well as the overstretched state administration. As a result, the budget is crumbling," she stated.
According to Dahlke, the new state government, encompassing a divided social ministry and an extra digital ministry, will cost citizens in Hesse more than 13 million euros annually, permanently and continually. She mentioned that the new or upgraded houses require more employees, who were previously dedicated to the specialized administration and no longer accessible for its vital functions.
The AfD (Alternative for Germany) parliamentary representative, Roman Bausch, claimed that the CDU (Christian Democratic Union) betrayed their promise of sound financial policy and intergenerational fairness. "In reality, the black-red coalition is starting with a historically high deficit," he stated. No state has accumulated so many debts within a budget as in 2024. Concurrently, the reserves will be depleted so swiftly that they're no longer visible, Bausch added. "With better budget allocation and stricter fiscal discipline, the gigantic deficit could've been prevented."
Finance Minister Alexander Lorz (CDU) defended the budget. He explained that he desired better budgetary conditions when creating the budget. However, the May tax audit disclosed that Hesse would suffer nearly 2.4 billion euros in tax losses by 2027. This predicament drove the need for the supplementary budget.
Lorz indicated that the economic atmosphere is unfavorable. "The era of financially lax policies, where abundant tax revenue supplied a significant financial buffer for numerous new political projects, is momentarily over," he declared. "We're slowing down - even in personnel expenses, which will only rise by 1.2% in the supplementary budget," he further remarked, and highlighted that no new positions were planned.
To mitigate the consequences of tax defaults, Lorz proposed borrowing roughly 2.8 billion euros. This credit line conforms to the constraints of the debt brake. In the 2023 state budget, the black zero under the line was still obtainable. In the blueprint, closer to 800 million euros is allocated to avert tax defaults this year, and two billion euros are designated for Helaba (Hessen-Thüringen Landesbank), which is Hessen's central bank. In reply to European banking supervisors' criticisms, Hessen intends to replace Helaba's silent deposits with fresh funds equivalent to two billion euros. A billion and a half euros is being deposited as cash in the Helaba and half a billion euros is being purchased as an AT1 bond from the bank.
The FDP (Free Democratic Party) fiscal expert, Marion Schardt-Sauer, cautioned against this risky strategy: "These are two billion euros that Black-Red is wagering." Savvy investors would know not to risk borrowed money. "Certainly, the Helaba is presently in a powerful standing, but we've frequently witnessed in the past how rapidly a crisis can disrupt a formerly stable bank," Schardt-Sauer expressed concerns. Borrowing funds to cover tax defaults is neither required nor necessary.
Schardt-Sauer emphasized: "Taking on debt may seem like the easy approach, while meticulous fiscal policy is taxing. Acquiring debt is the wrong approach." Revenue needs to be produced first before it can be expended. "The state must prioritize its crucial duties and spend on education, safety, and infrastructure," she insisted.
SPD (Social Democratic Party) budget expert Marius Weiß defended the injection of funds into Helaba. "The Hessen coalition and the state government aspire to a robust Landesbank that abides as a dependable partner for the Hessian economy and immune to takeover attempts," he clarified. "Essentially, we want to maintain the proficient workforce at the bank and strengthen the financial core of Frankfurt. And thus, we support this newly devised resolution." The necessary two billion euros are wise investments.
The Social Association Der Paritätische Hessen stated that the supplementary budget lacks focus in the fight against poverty. Black-Red must significantly fortify social programs, from kindergartens to care. Urgent matters, such as the shortage of competent workers and the disproportionate allocation of resources and opportunities, must be addressed decisively.
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- The Green party's parliamentary leader, Miriam Dahlke, criticized the state government's decision to include the Hessengeld, a costly initiative, in the supplementary budget, which could lead to a budget crisis in Hesse.
- The AfD parliamentary representative, Roman Bausch, accused the CDU of betraying their promise of sound financial policy by starting with a historically high deficit and increasing debts at an unprecedented rate.
- Finance Minister Alexander Lorz, from the CDU, defended the supplementary budget, stating that it was necessary due to tax losses, and proposed borrowing 2.8 billion euros to mitigate their consequences, which aligns with the debt brake's constraints.
- The FDP fiscal expert, Marion Schardt-Sauer, expressed concerns about the risky strategy of borrowing 2 billion euros to avoid tax defaults, arguing that it is unnecessary and could potentially destabilize the Helaba, Hessen's central bank.
- The SPD budget expert, Marius Weiß, defended the injection of funds into Helaba, stating that it is essential for maintaining a robust Landesbank that supports Hesse's economy and provides stability to Frankfurt.
