Federal Constitutional Court decides on local finances: red alert!

Federal Constitutional Court decides on local finances: red alert!

The financial situation of municipalities in Germany is tense, and the upcoming decision of the Federal Constitutional Court (BVerfG) could point the way. This is particularly evident in the current deficits, which are forecast at 24.8 billion euros for 2024 and a further 30 billion euros for this year. The concerns of the municipalities, especially with regard to their financial resources, are subject to the “reservation of the ability to pay” of the states, as the BVerfG must clarify in an upcoming hearing. This information highlights LTO.

The situation is particularly critical for smaller districts such as the Salzlandkreis and Mansfeld-Südharz in Saxony-Anhalt. These districts have high unemployment rates and have been struggling with financial constraints for years. They have continuously generated deficits over the past ten years. Your constitutional complaint, which invokes Article 28 paragraph 2 of the Basic Law, is an attempt to demand adequate funding that has not yet been secured.

Financial challenges for municipalities

The mayors in Germany are sounding the alarm about the impending financial bottlenecks. In fact, many cities have been on the brink of being unable to act for years. Representatives from various cities report crumbling streets, overcrowded daycare centers and unprocessed applications - the list of problems is long. The system itself seems to be a decisive factor: municipalities receive new tasks from the federal and state governments, but have to ensure their financing themselves. This leads to a dramatic situation in which demands are constantly increasing and an outdated municipal financial system cannot meet the challenges. This assessment can also be found at Deutschlandfunk.

The federal funding is usually only limited in time and is not enough for sustainable financial planning. In addition, trade tax revenue is falling in many regions, while property tax is barely enough to ensure simple maintenance. The number of inhabitants in metropolises is growing, but here too the demands on infrastructure and social services are increasing, which is exacerbating the polarization between cities and rural areas.

Consequences of a possible decision

A ruling by the BVerfG could have far-reaching consequences. It could either declare the minimum financial resources of all municipalities as sacrosanct or strengthen the position of the districts vis-à-vis the municipalities. This would fuel the debate about local self-government and financial responsibility. The situation is worrying for citizens: they often hear on site that there is a lack of resources or staff, which endangers trust in state institutions.

The urgent prospect of a reorganization of municipal revenues is therefore a central concern in order to meet the challenges ahead. The pressure on decision-makers is growing because without adjustments, the municipal crisis will not only persist, but will even worsen. BVerfG, get involved – the municipalities urgently need clarity and perspectives!