Financial equalization - Unexpected windfall: Census brings NRW 580 million euros
The population numbers recorded during the 2022 census bring unexpected supplementary revenues to North Rhine-Westphalia due to the Land Financing Equalization. The North Rhine-Westphalia Finance Ministry estimates that for the years 2022 and 2023, there will be a total of approximately 580 million Euro in returns. However, it is still unclear when the money will arrive, as the Finance Ministry stated in response to an inquiry from the German Press Agency (dpa).
The reason for this is the Land Financing Equalization, which aims to reduce the differences in financial power among the states. It is based on population size. Since the proportion of the NRW population in the total German population at the census in 2022 has slightly increased, NRW will receive more money from the equalization pots than before. The Ministry has not yet announced how much will be calculated in Duesseldorf annually.
Ministry: Still open, when the money flows
A legal regulation has been made for the Financing Equalization, according to which the census population figures will be taken into account step by step for one-third for the year 2022 and for two-thirds for the year 2023. The Ministry in Duesseldorf stated on dpa inquiry that NRW expects additional revenues of approximately 180 million Euro for the equalization year 2022 and approximately 400 million Euro for the equalization year 2023.
When the money flows is still open: "The Federal Ministry of Finance is currently checking when the corrections of the Financing Equalization can be made." Only then can it be determined when the additional revenues can be booked effectively in the budget. "There are currently no effects on the budget execution 2024 and the budget plan 2025," the Ministry emphasized.
NRW's share of the total population now 21.63 percent
The results of the 2022 census were published in June 2024. They showed that Germany had approximately 82.7 million inhabitants on May 15, 2022 - about 1.4 million fewer than previously assumed. The statistical decline in North Rhine-Westphalia was below average. On the contrary, the NRW share of the total population increased slightly by 0.13 percentage points to 21.63 percent (7.9 million people). As a result, NRW now receives a little more money from the Financing Equalization.
On the other hand, the fresh population numbers mean significant financial losses for some federal states, as a dpa survey showed. The states whose population was corrected more strongly than the average must therefore reckon with a significant revenue loss in millions and even arrears.
- The unexpected revenues for North Rhine-Westphalia are a result of the Census and the Land Financing Equalization, which aims to balance finances among the federal states.
- The North Rhine-Westphalia Finance Ministry anticipates a total of approximately 580 million Euro in returns from the census and the Financing Equalization for the years 2022 and 2023.
- The Federal Ministry of Finance is currently assessing when the corrections for the Financing Equalization can be made, impacting when the additional revenues can be officially accounted for in NRW's budget.
- According to the Financing Equalization regulation, the census population figures will be integrated for one-third in 2022 and for two-thirds in 2023, resulting in approximately 180 million Euro and 400 million Euro in additional revenues for NRW respectively.
- Due to the results of the 2022 census, North Rhine-Westphalia now accounts for 21.63% of the total German population, a slight increase from its previous share, leading to additional funding from the Financing Equalization.
- On the contrary, some federal states face significant financial losses as a consequence of the census-adjusted population numbers, with states whose population was corrected more than average anticipated to suffer millions in revenue losses and potential arrears.
- The German Press Agency reported that the Household Financing Equalization, a component of the federal fiscal equalization, also takes census population numbers into account to distribute resources among the federal states fairly.
