Third relief package: how the federal and state governments haggle for billions - politics

It is scheduled for September 28, the special prime ministerial conference of the country heads with the chancellor. At least since Corona, "Sonder-MPK" has sounded like a fight and a night session. That could also happen this time, but next week it will be about a different kind of autumn wave: the avalanche of costs that threatens to sweep households and companies over in the cold months.

After the traffic light had put together its third relief package at the beginning of September, it was not long before the first critical comments came from the federal states. Because the federal government does not want to finance the 65 billion package alone, but has not really asked the states for their opinion, the mood before the meeting next week is slightly irritable. Bavaria's finance minister Albert Füracker (CSU) already saw "dramatic budget problems" in store for the states and threatened to stop the relief package in the Bundesrat and call the mediation committee.

NRW state chief Hendrik Wüst (CDU) also brought this step into play. Danyal Bayaz, Green Minister of Finance in Baden-Württemberg, does not go that far. "We countries are aware that relief is urgent and important," he said Süddeutsche Zeitung. But he also emphasized: "But if coalition conflicts in Berlin are solved with money at the expense of the federal states - then we cannot simply support it."

Finance Minister Lindner is only moderately impressed by the lawsuits

Almost two weeks ago, the Federal Ministry of Finance published the first figures for the relief package. With the 65 billion euros, the federal states and municipalities would be involved with almost one billion euros this year and almost 18 billion euros next year. The skimming off of electricity profits should bring ten billion, the rest would go to the federal government.

Federal Minister of Finance Christian Lindner (FDP) was rather moderately impressed by the complaints of the countries at the beginning of the week. It was clear, he said on Monday in Berlin, that the federal and state governments would have to do their part if, for example, cold progression was to be prevented. "I also believe that the countries have the corresponding opportunities," he added. "Because unlike the federal government, many states did not make use of the exception to the debt brake in 2022."

The federal government, on the other hand, did it in the hundreds of billions. In the coming year, however, Lindner also wants to comply with the debt brake again at federal level - which should dampen his willingness to buy the states' consent. They, in turn, emphasize that the debt brake dictates that they are not allowed to take on any new debt - while the federal government has a little leeway.

Budget politicians in the Bundestag regularly point out that the federal states now account for the greater part of the total tax revenue. An internal memo from the Federal Ministry of Finance, which is available to SZ, speaks of "malfunctions at the expense of the federal government" that must be counteracted. The financial situation of the federal government is in an "obvious imbalance" compared to that of the states - also because the federal government is being financially more and more used for state tasks. The federal government has also repeatedly given sales tax shares to the states, for example in the refugee and corona crises.

In addition, the federal government also finances tasks that are actually a matter for the federal states and local authorities. On a long list of examples worth billions, the note includes the federal government’s contribution to the costs of accommodation and heating, the digital school pact, the expansion of all-day care in schools, the expansion of day care centers and the regionalization funds. The current imbalance in financial distribution, it is said, restricts the federal government's ability to deal with the future tasks ahead of it. In the case of national crises, on the other hand, the federal states "could not give up their national responsibility to stand up for one another".

Four billion euros more - "a real hammer" for Baden-Württemberg

Bayaz, on the other hand, does not see an imbalance at the expense of the federal government until 2020, because of the Corona aid. He also has a different view of the financial injections from Berlin. He calls it a federal "method" of first financing issues and then, after a few years, leaving the federal states alone with the costs. Examples are the Good Daycare Act or the planned successor regulation for the nine-euro ticket. "It's not fair to the countries."

In addition, the countries are facing their own budget problems. Bayaz, for example, is currently putting together the around 60 billion euro double budget for the years 2023 and 2024 in Stuttgart. The planned relief package would add up to around four billion euros to this table of figures. "We're currently squeezing millions out of our ribs, so four billion is a real hammer," he says.

For example, Bayaz expects his country to incur additional costs of 230 million euros for the housing benefit reform; the planned increase in child benefit will cost 950 million euros in 2023 and 1.4 billion euros in 2024, and the extended sales tax reduction for the catering trade will also cost the government in Stuttgart money. When it comes to expenditure, the states and municipalities also suffered more from inflation than the federal government - as employers for their civil servants and employees, as builders and in the maintenance of their properties. The finance minister of Baden-Württemberg also sees "open questions" beyond the third relief package. For example, the further financing of refugee costs.

With their protest, the federal states are not only concerned with the part they should take on, but also with the lack of integration into the plans of the federal government from their point of view. "As countries, we have to work together constructively and also take into account the political reality in Berlin," says Bayaz. "The fact that something is then thrown at us with the hard expectation that we have to support it without criticism - that's not possible. If things went that way, we could abolish the Federal Council right away."

Füracker also criticized the fact that the "so-called relief package" had not been coordinated with the federal states. "It's not good style," he said last week. And Wüst complained that the federal government automatically assumes that the states will participate. He "didn't speak to any of us".

Bayaz is now relying on the upcoming talks with the federal government. "And then everything has to be on the table." How rich that will be covered, however, is more than questionable.

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