Germany’s Green Party is proposing a series of measures aimed at alleviating the financial burden on municipalities struggling with record levels of debt. A position paper, released ahead of a two-day closed-door meeting of the party’s federal executive in Bonn, outlines six key areas for reform, arguing that a failure to address the issue risks undermining local democracy and community cohesion.
The party highlights the vital role that cities, towns and districts play in German society, emphasizing their function as centers for education, recreation and community engagement. However, municipalities are currently facing a record shortfall of approximately €25 billion, the highest since German reunification in 1990, according to the Federal Statistical Office. This deficit is impacting their ability to invest and deliver essential services.
The Green Party proposes that the federal government increase the share of value-added tax (VAT) allocated to municipalities. They believe this adjustment would effectively address the existing deficit. Furthermore, the party advocates for a reinforcement of the principle of concurrency, which stipulates that the federal government should financially support any new responsibilities delegated to local authorities, ensuring that municipalities are adequately funded for those tasks.
The party also urges swift disbursement of the €58 billion earmarked for infrastructure from a special fund, accompanied by streamlined application processes consolidated on a central funding platform to reduce bureaucratic hurdles. They suggest a “municipal freedom budget” allowing for flexible allocation of funds to address specific local needs. As an example, they cite the “Communal Climate Million” program in Saxony, which provided each district with €1 million for climate protection initiatives – a model they propose for broader implementation.
In addition, the Green Party is calling for enabling municipalities to levy charges based on the principles of polluter pays, such as packaging levies or mobility contributions. The federal government should also provide central digital solutions to lower administrative costs and relieve personnel pressure, targeting a “one-time-only” data provision system, allowing citizens to provide information once for secure access by relevant authorities.