Financial equalization - Census deprives some federal states of hundreds of millions of euros
The census-recorded population numbers mean significant financial losses for some federal states. This was revealed in a survey by the German Press Agency. The states whose population was corrected downward more than the national average must therefore reckon with a revenue shortfall in the millions and even repayments.
The Finance Ministry in Lower Saxony expects annual deficits "in the low three-digit million range" as a result. The background is the Census 2022. It turned out that around 7.94 million people live in Lower Saxony, which is about 170,000 fewer than previously calculated. The share of the state in the total population in Germany decreased as a result, which negatively affects the tax revenues from the federal financial equalization.
Bavaria has around 290,000 fewer inhabitants
Other states are experiencing similar developments: The Finance Ministry in Hesse expects deficits "in the lower three-digit million range." The Senate in Berlin is preparing for reductions of up to 550 million euros per year. The Finance Office in Hamburg estimates its deficit at 190 million euros per year, and in Mecklenburg-Vorpommern it is about 180 million euros per year less from the federal financial equalization. In comparison, the expected annual deficit of 15 to 25 million euros in Saxony-Anhalt seems rather manageable.
Bavaria had to count itself among the losers as well. There, the population size was corrected downward by around 290,000 inhabitants or 2.2 percent. Nationwide, the population decline amounted to only 1.6 percent. The Finance Ministry in Munich is still examining the consequences of this development.
Some states will have more financial leeway
However, there are also winners: The population decline in the most populous federal state, North Rhine-Westphalia, is smaller than on the federal level. The Finance Ministry therefore expects additional revenues of around 580 million euros for the years 2022 and 2023, even though the new census only affects these years proportionally. Baden-Württemberg also expects relief due to the new population numbers, without specifying amounts.
Rhineland-Palatinate's population share has increased. In the following years, they expect additional revenues of around 50 million euros per year. In addition, there are "restricted positive effects" for the previous years. The changes will become effective when discussed between the federal and state governments. Thuringia estimates its "census effect" at approximately 130 million euros extra per year.
The Saarland calculates with around 200 million euros more this year. Of this, 30 million euros will go to the municipal level, said Finance Minister Jakob von Weizsäcker (SPD). Minister-President Anke Rehlinger (SPD) said the additional money would give the Saarland "a little more breathing room" and "more space for political designs." It is not meant, "if we get more, that we immediately have more to spend." The coming years will continue to be characterized by consolidation.
Census data are also applied retroactively.
A central overview of how the distribution of federal funds to the federal states is changed by the new census data is not available at the Federal Finance Ministry. According to a spokesperson, the distribution of turnover tax and population-dependent federal allocations to the states are primarily affected.
The full financial impact of the new population numbers will only unfold from this year onwards. For the final settlement of the years 2022 and 2023, the census will only be taken into account to the extent of one third in the first year and two thirds in the second year. Consequently, states with a significant population decline face reimbursements, while the beneficiaries face an unexpected setback.
- The significant population losses in some federal states, as revealed in the Census 2022, will result in financial equalization shortfalls.
- Lower Saxony, with a population reduction of around 170,000 people based on the Census 2022, anticipates annual deficits in the "low three-digit million range."
- Bavaria, with a population decrease of approximately 290,000 inhabitants, is also among the states experiencing population-related financial challenges.
- The Senate in Berlin is planning for potential reductions of up to 550 million euros per year due to the Census 2022, while Hamburg expects a deficit of 190 million euros per year.
- Mecklenburg-Western Pomerania is projected to receive less from the federal financial equalization due to the Census 2022, with an estimated annual shortfall of 180 million euros.
- In contrast, North Rhine-Westphalia, the most populous federal state, is expected to receive additional revenues of around 580 million euros due to a smaller population decline than the national average.
- Finance Minister Jakob von Weizsäcker of Saarland announced that they would receive around 200 million euros more this year as a result of Census 2022 data, with 30 million euros going to municipalities.
- Retroactively applying Census 2022 data, the Finance Ministry has confirmed that the distribution of turnover tax and population-dependent federal allocations to the states may be significantly changed.
