How much money can which Bavarian ministry spend in the coming year? Starting today, the members of Prime Minister Markus Söder’s cabinet will be discussing this in their digital retreat on the budget for 2021. The Corona crisis threatens the Free State with heavy losses in tax revenues over the next three years. A minus of 3.7 billion euros is expected for 2021 alone.
Corona consequences: New loans instead of debt reduction
Finance Minister Albert Füracker (CSU) had recently said that it was “dishonest in this situation to say that Bavaria does not have to take out loans”. Because the pandemic is far from over. Füracker therefore wants to “continue to drive on sight and thus remain more agile”. After many years in which Bavaria was even able to repay old debts, 2021 would be the second year in a row that the Free State would have to raise fresh capital. At the end of 2019, Bavaria was in the chalk with donors with around 27 billion euros.
Record financial compensation for municipalities despite tax losses
This year, too, the holes in the state budget will be balanced out with new debts – the state parliament has approved borrowing of up to 20 billion euros this year. But it is also a fact that the Free State agreed on a record financial settlement with the municipalities a few weeks ago: 10.3 billion euros are already fixed in the budget plan for 2021 on the expenditure side. Finance Minister Füracker and Prime Minister Söder had recently ruled out tax increases again.
In recent years, the state government has usually withdrawn to the former St. Quirin Monastery on Lake Tegernsee for budget planning. Because of Corona, the ministers are largely discussing video conferences this year.
No double household because of Corona
Unlike usual, the Council of Ministers will not decide on a double budget. Because of Corona, a decision should only be made about the coming year. This year, the state parliament approved a loan of up to 20 billion euros due to Corona and suspended the debt brake.
After the cabinet meeting, it should then be clear whether and how many new debts will have to be taken on in 2021. Bavaria benefits from the fact that it receives very good conditions for money lending on the financial market: In September, the Free State again received the top rating “AAA / A-1 +” with a stable outlook from the agency “Standard & Poor’s”. It is the only state with this highest rating. The state government plans to announce the details of the Bavarian budget for the coming year at a press conference on Wednesday morning.
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