German Municipalities Urge Fair Share of Infrastructure Funds
The German municipalities are pressing for a fair share of the 100 billion euros allocated from the infrastructure special fund for the benefit of the federal states and municipalities. “The federal states must not play games and try to squeeze the municipalities’ share” said Burkhard Jung, President of the German Cities Association, to the Rheinische Post.
Jung emphasized that the federal government must ensure that a fair share of the 100 billion euros is included in the federal law for the distribution of the special fund, in line with the municipalities’ share of public investments in the respective federal state. “This would be more than 60 percent in many federal states and even much more in some” Jung said.
The municipalities had to absorb a record deficit of almost 25 billion euros last year and are now facing an investment backlog of almost 190 billion euros, said the Leipzig Mayor. “Behind this are schools that cannot be renovated, bridges that cannot be repaired and bus lines that have to be shut down.” Jung added, “We urgently need the lion’s share from the special fund – quickly and uncomplicatedly.”
Meanwhile, the German economy is criticizing the recent federal-state agreement, which allows the federal states to use their 100-billion-euro share of the infrastructure special fund to finance already planned investment projects. “Bund, states and municipalities are under a duty to consistently implement additional projects” said DIHK President Peter Adrian to the Rheinische Post.
“It is good that Bund, states and municipalities are now trying to quickly reach a balance of their interests. All will benefit from better investment incentives and a recovering economy through growth-driven tax revenues” Adrian said. “We have an enormous investment backlog in Germany, which we must clear. Compared to the pre-Corona level, around 65 billion euros in private investments were missing in 2024 alone” warned Adrian.
New business confidence in the government will only be created by a reliable and swift implementation of the tax policy relief measures, he added. “Companies expect the announced relief measures to arrive quickly at their doorstep. Any delay or even disappointment would extinguish the possible positive effect” said the DIHK President.
Foreign investors will not come to Germany solely because of a temporary improvement in the depreciation rate, Adrian warned and called for more reform willingness from the Union and SPD, also considering the social system. “They need, like the domestic companies, long-term attractive location conditions. This requires genuine reforms in many areas, such as the acceleration of the planning and approval process, the reduction of bureaucracy, or the social contributions” Adrian said.