Secondary budgets under scrutiny: consequences of the budget ruling

Secondary budgets under scrutiny: consequences of the budget ruling

Following the Karlsruhe budget ruling, all of the federal government's secondary budgets are under scrutiny. One thing is certain so far: 60 billion euros for climate projects and the modernization of the economy are gone. But are further billions possibly not available, for example for the energy price brakes? And what about money that has already been spent this year? Experts are to help the Bundestag and federal government with the assessment.

The Federal Constitutional Court had declared the reallocation of coronavirus loans to the Climate and Transformation Fund null and void. One of the reasons given by the judges was that the federal government was not allowed to take advantage of the debt brake exception to accumulate loans in advance.

Among other things, it is now unclear whether projects from the climate fund will have to be postponed to the regular budget for 2024. The experts are of different opinions as to whether the budget for the coming year can even be adopted in the next few days under these circumstances.

However, the experts agree on one thing in their statements published in advance: the ruling will have far-reaching consequences - probably not only for the climate fund, but also for other special funds. Economics Minister Robert Habeck (Greens) sees loans for the energy price brakes wobbling - and warns of costs for citizens.

What special funds does the federal government actually have?

According to a list compiled by the Federal Audit Office, the federal government currently maintains 29 special funds. These subsidiary budgets are not an invention of the Ampel government: the oldest dates back to 1951 and promoted the construction of housing for miners. There are also, for example, funds for the participation of severely disabled people in working life, an inland waterway fund, a special fund for the expansion of daycare places and one for digital infrastructure.

The latest special funds are economic aid due to the coronavirus crisis, reconstruction aid for flood victims, the 100 billion euro special fund for the German Armed Forces and the fund for energy price brakes following the Russian attack on Ukraine.

Could they all be affected by the Karlsruhe ruling?

No - and for several reasons. Firstly, the Federal Constitutional Court only commented on debt-financed special funds. However, there are also funds that are financed by their own income. One example is the so-called ERP special fund, which was originally endowed with funds from the Marshall Plan. According to the Court of Auditors, however, the majority of the special funds are loan-financed - at the end of 2022, there was still a debt potential of around 522 billion euros.

Special assets that were created before the introduction of the debt brake are also likely to be exempt from the budget ruling. This is because Article 143d of the Basic Law stipulates that only credit authorizations that were approved after 2010 are counted towards the debt brake.

What about the money for the Bundeswehr?

According to the current view of the traffic light coalition, this is also not affected. The reason for this is that the Bundestag anchored the pot filled with loans amounting to 100 billion euros separately in the Basic Law. With the agreement of the CDU/CSU, the constitution not only stipulated what the money may be used for, but also that the debt brake does not apply here. The FDP in particular had insisted on this in order to secure the funds extra well.

What happens if the fund for the energy price brakes, the "double whammy", is affected?

Similar to the Climate and Transformation Fund, which was criticized by the Federal Constitutional Court, the Economic Stabilization Fund (WSF) was virtually provided with loans in advance. In 2022, the federal government approved loans amounting to 200 billion euros to cushion the high electricity, gas and district heating prices. It was able to do this because the debt brake was suspended this year due to the coronavirus emergency and the war in Ukraine. However, the money should not only be used in 2022, but also in 2023 and 2024. This is why Economics Minister Habeck fears that the WSF is also wobbling.

This could be even more problematic than the climate billions, as 67 billion euros in WSF loans were disbursed this year alone, according to information from the Ministry of Economic Affairs. According to the Ministry of Finance's plans, around 103 billion should have been carried over into the coming year.

Will customers then have to repay the aid?

It is unlikely that aid granted this year will have to be repaid. This is because the federal government and the Bundestag have decided on the energy price brakes - how they finance them is their problem. However, it is conceivable that the federal government will now cancel the electricity and gas price brakes prematurely. They should actually still apply in spring 2024 as a safeguard, even though prices are currently not that high. If energy prices were to rise again in winter, they could no longer be curbed by the government. "Then we will have higher gas and electricity prices and district heating prices," warned Habeck.

Will there be a clear answer at the hearing on Tuesday?

The experts' statements were already published on Monday. Most of them consider the effects on the special fund for energy price brakes to be conceivable - but they are not clear about the consequences.

What should happen to the budget for 2024 is controversial among the experts. Economist Jens Südekum does not believe that the core budget will be affected. He advises that the Bundestag should approve the budget as normal, partly because not all open questions regarding the ruling can be clarified by the end of the year. There could then be a supplementary budget next year.

Tax law expert Hanno Kube from the University of Heidelberg, however, strongly advises against this. "The current draft of the Budget Act 2024 could be unconstitutional," he warns. The Federal Court of Auditors considers not only next year's budget, but also this year's budget, to be "extremely problematic from a constitutional point of view" due to the energy price brake funds that have already been spent.

Does the ruling only apply to special federal funds?

The federal government assumes that the ruling also applies to the budgets of the federal states. There are also debt-financed special funds in some federal states that operate with similar mechanisms to those at federal level. However, the consequences are not yet certain here either.

1. Given the uncertainties surrounding the budget ruling, some experts are questioning whether additional funds might be available for energy price brakes from the federal government's secondary budgets.
2. The Karlsruhe ruling could potentially impact various special funds maintained by the federal government, such as the fund for energy price brakes, in addition to the Climate and Transformation Fund.
3. Among the 29 special funds currently managed by the federal government, some, like the ERP special fund, are financed by their own income and thus may not be affected by the budget ruling.

Source: www.dpa.com