Rhineland-Palatinate: 8 billion euros for investments in cities and daycare centers!

Rhineland-Palatinate: 8 billion euros for investments in cities and daycare centers!

Prime Minister Alexander Schweitzer and Finance Minister Doris Ahnen (both SPD) see the results of the federal-state working group on fair burden sharing as significant progress for the financial possibilities of municipalities in Germany. Loud South German newspaper Municipalities and states can now hope for increased investment power. The new regulations announced by the federal government are intended to enable cities and municipalities to push ahead with urgently needed infrastructure projects.

A central element of these regulations is the federal government's full assumption of the municipalities' shortfall in revenue from 2025 to 2029. This compensation is carried out by adjusting the fixed amounts of the municipalities' sales tax. In addition, the federal government will also cover the states' shortfall in revenue from 2026 to 2029.

Funding for infrastructure projects

In addition, the federal government is providing eight billion euros from the special infrastructure fund to promote various education and care infrastructure as well as university and science infrastructure. An outstanding project is the newly initiated daycare investment program, which has a volume of four billion euros and is limited to four years. The states are obliged to co-finance five percent of the costs.

The funds are distributed according to the Königstein key, which results in an allocation of almost 200 million euros for Rhineland-Palatinate. Another long-term fund is the transformation fund for hospitals with a total volume of 50 billion euros over a period of ten years. Federal funding will increase to 3.5 billion euros annually in the first four years, while the states are expected to contribute 1.5 billion euros per year.

Criticism and support from the federal and state governments

Federal Finance Minister Lars Klingbeil reported in a media release that all heads of government consider the plan, described as a “growth booster,” to be effective. However, there is also criticism of the distribution of the financial impacts, as two thirds of the costs have to be borne by states and municipalities. However, the federal government has already promised short-term, immediate compensation measures to address this challenge. A concrete proposal for a solution should be developed before the upcoming deliberations in the Bundestag Saarland.de reported.

Prime Minister Anke Rehlinger said that compensation for state and local government budgets was an important step. The formation of the federal-state working group aims to implement the principle of causal connectivity, which ensures improved financial cooperation between the levels.

As part of the agreements, it was also stipulated that the distribution of funds should take into account the Königstein key from 2019 and 2024, which also means for Saarland that it will receive 1.6 million euros more annually compared to the previous key. In total, over 19 million euros more will flow into Saarland's public coffers over a period of 12 years.

Overall, the new regulations show a clearly defined goal: investments should be implemented quickly and visibly for citizens and the economy. To make this process easier, simple and low-bureaucracy procedures as well as flat-rate allocations are planned. Double funding is also possible in order to strengthen financial support for various projects.