Constitutional Court rules on traffic light budget trick
In the next few days, the Bundestag will finalize the budget for 2024 - but before that, a budget policy decision from the coronavirus era threatens to catch up with the traffic light government. The Federal Constitutional Court is ruling today on the second supplementary budget for 2021.
At stake are billions of euros that the federal government has already earmarked for climate protection. The ruling could create a huge funding gap - and jeopardize funding programmes for heating replacement, refurbishment and the semiconductor industry.
What is this money?
The year 2022 had already begun when the traffic light coalition postponed another 60 billion euros in the previous year's federal budget. Loans that were actually intended to combat the coronavirus pandemic but were not needed were to be invested in climate protection. The money was subsequently booked into the Energy and Climate Fund - a special fund that is now called the Climate and Transformation Fund (KTF) and is managed separately from the rest of the budget. The government uses this fund to pay for long-term investments for more climate protection.
Who has taken legal action against this - and with what arguments?
Members of the opposition CDU/CSU parliamentary group took the matter to court. They criticized the federal government for stockpiling money and thus deliberately circumventing the debt brake in the Basic Law. This was not honest, because without the money from the special fund, many billions would have to be saved elsewhere for climate projects. The Federal Audit Office has also described the reallocation as "constitutionally dubious". There is no conclusive justification as to why money intended to combat the coronavirus is being misappropriated for climate protection. Climate change must be tackled using normal budgetary rules.
How does the German government justify the reallocation?
State Budget Secretary Werner Gatzer does not see any misappropriation. After the corona-related dip, economic development could also be boosted with the help of investments in climate protection, he argued. The subsequent allocation was justified because there would otherwise have been a delay of several months.
Hasn't the court already ruled on the matter?
A year ago, the Federal Constitutional Court rejected an urgent application by the CDU/CSU parliamentary group to temporarily restrict the use of the 60 billion. However, this was not yet a decision on the issue itself. At the oral hearing in June, the judges did not reveal any tendencies, but asked many questions about time limits for budget planning and the proportionality of borrowing. Judge Sibylle Kessal-Wulf, for example, began by asking whether there could and should be a separate regime for special assets.
What consequences could the ruling have?
The Ampel parliamentary groups see several possible scenarios. If the court declares the transfer of the loans to be legal, there will be no need for action. It would also be possible for the judges to slap the government on the wrist, so to speak - by not declaring the procedure clearly unlawful, but by imposing stricter requirements for similar situations in the future.
The consequences would be greater if the court were to declare the reallocation of the 60 billion euros invalid. The money would then no longer be available in the KTF. Federal Economics Minister Robert Habeck (Greens) said in June that this would hit Germany hard in terms of economic policy. It would mean "that the floor on which we are trying to stabilize the economic situation in Germany would be pulled away".
What is financed from the Climate and Transformation Fund?
The special fund alongside the budget has become the German government's all-purpose weapon in recent months. It contains programs for more climate protection, for the establishment of future technologies and the development towards a climate-neutral economy. For example, funding is provided for the climate-friendly refurbishment of residential buildings and the replacement of old oil and gas heating systems. Citizens and companies are relieved of the burden of electricity prices from the fund. Further funds will flow into electromobility, the hydrogen economy and the expansion of railroads. State subsidies for the establishment of large semiconductor factories such as that of the US chip manufacturer Intel in Magdeburg also come from the KTF.
Is all this in danger next year?
No, not immediately. According to estimates from the traffic light factions, there should be enough money in the special fund for 2024 either way. However, program expenditure of at least 211.8 billion euros is planned up to 2027. Without the 60 billion, it will probably not be possible to cover all of this. If Habeck and Finance Minister Christian Lindner (FDP) do not want to cut them, they will have to find money elsewhere.
Is there a fourth scenario?
Yes, this is causing even greater concern among budget holders. The Bundestag believes it is possible that the constitutional judges will question the accounting system in general. At the moment, the federal government can use special funds to circumvent the debt brake and create additional scope for spending. However, it is feared that the highest German court could decide that outflows from special funds fall under the debt brake. This would pose major problems for Lindner, as the federal government currently maintains 29 special funds with debt potential amounting to several hundred billion euros.
- The Federal Government's use of the Climate and Transformation Fund (KTF) to finance climate protection projects has come under scrutiny by the opposition CDU/CSU parliamentary group, who argue that the reallocation of funds from the coronavirus era deliberately bypasses the debt brake in the German Constitution.
- In the ongoing case, the Bundestag and the Federal Government are closely monitoring the Constitutional Court's judgments, as the ruling could have significant implications for the finances and budget processes of the Federal Government.
- If the Constitutional Court rules that the reallocation of funds from the corona-related budget to the KTF was unconstitutional, it could potentially threaten funding for various climate-related programs and projects managed by the Federal Government.
- The outcome of the case may also impact other special funds controlled by the Federal Government, as it could set a precedent for the interpretation of the debt brake and its application in the context of such funds.
Source: www.dpa.com
