Census turns into a nasty surprise for several federal states
The census brings clarity about the population structure. In some federal states, there are many more or fewer people living than assumed. For instance, Niedersachsen and Berlin will have to manage with less money, while NRW can rejoice.
The population numbers obtained from the census mean significant financial losses for some federal states. A survey revealed this. 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 shortfalls "in the low three-digit million range."
The background is the Census 2022. It turned out that in Lower Saxony, around 7.94 million people live, which is about 170,000 fewer than previously calculated. The share of the state in the total population of Germany decreased, which negatively affects the tax revenue from the federal financial equalization.
Other states face similar situations: In Hesse, the shortfalls might be "in the lower three-digit million range," according to the local Finance Ministry. Berlin's Senate expects to be short by up to 550 million euros per year until 2028. The Finance Office in Hamburg estimates its deficit at 190 million euros per year, and Mecklenburg-Vorpommern at approximately 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 insignificant.
Bavaria is also among the losers, as the population size was corrected downward by around 290,000 inhabitants or 2.2%. Nationwide, the population decrease was only 1.6%. The Finance Ministry in Munich is still assessing the consequences of this development.
However, there are also winners: The population decline in the most populous federal state, North Rhine-Westphalia, is smaller than at the national level. The Finance Ministry expects to receive additional revenue of around 580 million euros, retroactively for the years 2022 and 2023, even though the new census only affects these years partially. Baden-Württemberg also anticipates relief without specifying amounts.
Rhineland-Palatinate's population share has increased. In the following years, they expect additional revenue of around 50 million euros per year. Additionally, there will be "restricted positive effects" for the previous years. The changes will become effective when advised by the Federal and State governments. Thuringia calculates its "census effect" at approximately 130 million euros extra per year.
The Saarland calculates with around 200 million euros more this year. Of that, 30 million euros will go to the communal level, said Finance Minister Jakob von Weizsäcker. Minister-President Anke Rehlinger said the additional money would give the Saarland "a little more breathing room" and "more space for political shaping." It's not that "if we get more, we'll spend more right away." The coming years will still be characterized by consolidation.
## States face arrears payments
A central overview of how the distribution of federal funds to the federal states is changing due to the new census data is not available at the Federal Finance Ministry, according to a spokesperson. Those primarily affected are the distribution of sales tax and per capita allocations of the federal government to the states. The full financial impact of the new population figures from this year will unfold.
For the final settlement of the years 2022 and 2023, the census will only be taken into account to one third in the first year and to two thirds in the second year. Therefore, states with a high population decline are facing arrears payments, while the beneficiaries are looking forward to an unexpected windfall.
The budget policy of affected states will need to adapt to the revenue shortfalls resulting from the Census 2022. Berlin, for instance, is expected to face an annual deficit of up to 550 million euros until 2028 due to the lower population numbers. In contrast, North Rhine-Westphalia, one of the winners, anticipates additional revenue of around 580 million euros, benefiting from its smaller population decrease compared to the national average.
