The money
The state’s revenues are suffering from the ongoing economic downturn. By 2026, the Free State alone must expect tax losses of around 2.4 billion euros, according to the current regionalized tax estimate. In 2025 alone, it is roughly estimated that we will have to make do with around 900 million euros less than previously expected, Finance Minister Albert Füracker (CSU) calculated a few days ago.
“These new estimates massively exacerbate the already tense budget situation and thus make planning the supplementary budget even more difficult,” he warned. And now there are discussions about municipal financial equalization: about how much money the Free State transfers to municipalities that have little tax revenue of their own.
The leading municipal associations – district, city, municipal and district councils – have also repeatedly sounded the alarm in the past few weeks and months: income has stagnated while expenses have risen massively: higher personnel costs, higher social spending, increasing spending on construction and infrastructure. In particular, spending on social services such as the integration of refugees has increased significantly.
The demands
The municipalities are demanding more money from the Free State not only currently, but permanently: The general financial resources must be secured so that the social, educational, health and technical infrastructure remains guaranteed. Therefore, from the perspective of the municipalities, the so-called municipal association quota in the general tax association must be increased, i.e. the municipalities are demanding a higher percentage of the collective tax revenue. Instead of temporary funding programs, there should also be more ongoing, non-earmarked funds. And: The municipalities no longer want to take on any additional additional burdens that result from federal decisions: the principle of “whoever buys pays” urgently needs to be brought back to life.
The threats
The city and municipal councils recently issued dire warnings: If there is not enough money, urgently needed investments in daycare centers and schools, in the infrastructure with roads and paths, in the energy supply or local public transport would have to be postponed or canceled. And the district council has also repeatedly warned in recent months of a municipal inability to act.
Compromise in sight?
As loud as the leading associations have been in the past few weeks, they have been just as quiet in the past few days: In view of the upcoming top-level discussion on Monday, no one wanted to say anything when asked. The negotiations are difficult enough as it is, they say.
The common insight is there: that money is tight everywhere. But it is questionable whether a compromise can be achieved in the four hours initially scheduled for Monday. Some people still remember a round of negotiations many years ago when the press conference had to be postponed several times. And this time?
