The Association of German Districts (Landkreistag) has issued a stark warning to the federal and state governments, cautioning of a looming “collapse” of local authorities. According to Kay Ruge, Managing Director of the umbrella organization for municipalities, no meaningful action has been taken to curb the escalating deficits plaguing local governments, a situation he detailed to the Frankfurter Allgemeine Zeitung.
While municipal revenues have seen a marginal increase, soaring costs, particularly in social services and personnel expenses, are driving districts, cities and municipalities deeper into debt. Ruge stated that the existing deficit of over €30 billion annually remains unaddressed and is, in fact, poised to worsen significantly in the new year.
The Landkreisverband expressed disappointment regarding the stalled negotiations between the federal government and states concerning a greater federal contribution towards the costs of legislation passed in the Bundestag. Local authorities have been advocating for a “Konnexitätsprinzip” (benefit-principle), asserting that the federal government should compensate states for expenses incurred due to federal laws. However, a joint working group has yet to reach an agreement.
Ruge accused the federal government of adhering to a maximalist position, citing the constitutional parameters and the “coverage ratio” as justification which dictates that the federal and state budgets should not be unduly strained. He sharply criticized the government’s stance that it cannot be obligated to provide financial support while the federal budget remains under such pressure, branding the ongoing process as “mere parlor game” if this position isn’t abandoned.
A newly proposed mechanism aims to address this issue by establishing a committee tasked with estimating the costs of legislation before cabinet approval. This committee would include representatives from the federal government, states and the Association of German Districts. The regulation would apply only to laws projected to cost over €250 million.
While Ruge commended the inclusion of local authorities in this new process, emphasizing its potential for increased transparency and accountability, the fundamental issue of federal financial responsibility remains unresolved. The concerns raised by the Landkreisverband highlight a widening political chasm and raise critical questions about the long-term financial viability and autonomy of local governments within Germany’s complex system of shared governance. The inability to forge a consensus fundamentally undermines the core principles of intergovernmental financial responsibility and threatens the capacity of local authorities to deliver essential services.