- Viewpoint: Transference of Outdated Financial Obligations to Occur Exclusively through Constitutional Alterations
The taking over of local government's historical debts by the federal administration is not achievable without alterations to the Basic Law, as suggested by a report from the Parliamentary Research Service for the FDP faction, initially reported by the "Rheinische Post." Given that relieving local financial burdens is a duty of the state governments presently, the federal government would need specific authorization to assume debt responsibility, states the report. This makes a resolution to the debt predicament improbable within this legislative term.
Originally, the SPD, Greens, and FDP had agreed in the 2021 coalition agreement to assist municipalities in addressing their debt predicament within the scope of intergovernmental financial management. Numerous cities and municipalities, particularly in North Rhine-Westphalia, Saarland, and Rhineland-Palatinate, have such expansive cash reserves that essential investments in schools, infrastructure, swimming pools, theaters, and other areas are under threat.
As per a proposal from the Federal Ministry of Finance, the federal government and the states should each potentially assume half of the excessive liquidity reserves of the municipalities and simultaneously compel the municipalities to steer clear of excessive spending.
Regardless, the report suggests that the Basic Law would require amendment for both approaches, and it is also ambiguous whether a federal assumption of local debts would fall under the debt threshold. In that scenario, an explicit exception would also be necessary.
At present, the Union and various states are opposed to reform, primarily due to the belief that only indebted municipalities would reap benefits from it. This would be unfair and detrimental to states that maintain their municipalities adequately or minimize their debt without external help, argues states like Bavaria.
"The CDU should take action at both the state and federal levels. Otherwise, nothing will progress," insisted the chairman of the Budget Committee in the Bundestag and the deputy chairman of the North Rhine-Westphalian FDP, Frank Schäffler. The SPD has lately urged the Union to relent in this matter as well.
Despite the ongoing disagreements and oppositions, the SPD still advocates for the Union to soften its stance on assuming local debt responsibility. The SPD, along with its coalition partners in the 2021 agreement, had initially intended to help municipalities manage their debt within intergovernmental financial management.
