Berlin's Wegner: Relief package should not burden municipalities!

Berlin's Wegner: Relief package should not burden municipalities!

In the current discussion about financial relief for municipalities and states in Germany, concerns about high burdens are at the forefront. The Berlin Prime Minister Kai Wegner has formulated clear conditions for his approval of a planned relief package. He demands that no measures that put a strain on the budget should be supported by the states and emphasizes the need for structural changes in the financing system. “Whoever orders, pays,” said Wegner and calls for a fundamental criticism of the federal government’s tasks in order to distribute the financial burden more fairly. In particular, he refers to the Deutschlandticket, an example of costly benefits that ultimately have to be financed by the states. The current financial burden has increased further due to the crises of recent years, which is why economic stimulus is urgently needed to stabilize the situation. Wegner makes it clear that the burdens on the countries must remain bearable in order to enable long-term planning.[star report]

In connection with the federal government's financial obligations, the support offer is also of central importance. In terms of state organization law, the municipalities are assigned to the states that regulate municipal budget law. Despite this constitutional responsibility of the state, the federal government supports the municipalities financially through various measures. Trade tax compensation was significantly expanded in crisis years, such as in 2020 with 6.1 billion euros. Extensive relief is also planned for the coming years in order to strengthen the financial strength of the municipalities. An annual relief package of 5 billion euros since 2018 shows how the federal government is actively contributing to solving the financial challenges facing municipalities.[Federal Ministry of Finance report]

Planned relief package

With regard to the planned relief package, among other things, better tax depreciation options for companies are promised. In addition, corporate tax is expected to fall from 2028, which could have positive effects on the corporate landscape. However, a federal-state summit with Chancellor Friedrich Merz originally planned for June 18th was postponed indefinitely. A new date has not yet been set, which underlines the urgency of the negotiations as all actors rely on faster solutions.

Extensive federal aid

Federal support has many facets. In addition to funding additional childcare places and digital school infrastructure, extensive amounts are also available for local public transport and social infrastructure. An extraordinary 1 billion euros will flow into public transport annually from 2021 to 2024, and from 2025 even 2 billion euros are planned. In addition, the federal government's contribution to the costs of accommodation for financially weak municipalities will be continued generously, so that this relief will amount to over 11 billion euros in 2024. All of this is happening in the context of a clear federal financial strategy that aims to distribute the burden evenly and at the same time strengthen the local financial base.[Federal Ministry of Finance report]