The German federal government has introduced a bill to amend the Basic Law, aiming to alleviate the municipal debt crisis. The draft, reported by the Westdeutsche Allgemeine Zeitung, proposes a one-time exception to allow the federal government to take on a maximum of half of the approximately 31 billion euros in liquid credit of German municipalities.
The bill, which is expected to be debated in the Bundestag and the Bundesrat, would grant the federal government the constitutional competence to take on the debt of the states, to which municipalities belong. The states, which would like to take advantage of the federal government’s debt relief, would be required to provide additional funds and take measures to prevent the buildup of excessive municipal liquid credit in the future.
The draft has been welcomed by Achim Post, the SPD state chairman, who sees it as a historic turning point for many debt-ridden municipalities. Instead of spending millions on debt repayment every year, municipalities could finally have the financial leeway to invest in schools, kindergartens, streets, and sports facilities, Post said.
However, the bill faces an uncertain future, as it requires a two-thirds majority in the Bundestag and the Bundesrat, and the opposition from the CDU and other parties is likely to be strong. The CDU’s state premier, Hendrik Wüst, had previously criticized the proposal as a “trick” and emphasized the state’s own plans to provide debt relief, worth 7.5 billion euros over the next 30 years.
In a recent statement, Post appealed to the CDU to reconsider its stance and support the bill, arguing that a broad, cross-party consensus exists in North Rhine-Westphalia on the need for debt relief. It would be a historic mistake, Post said, if the bill were to be instrumentalized for partisan purposes in the upcoming federal election.