Federal states: State financial equalization comes before the constitutional court

Less than three weeks after the cabinet decision, the Bavarian state government submitted its constitutional complaint against the state financial equalization before the Federal Constitutional Court in Karlsruhe.

“A solution through negotiation in the group of countries was objectively hopeless with a maximum of five donor countries and at the same time at least eleven recipient countries. There was therefore no alternative for the Free State to file a lawsuit in Karlsruhe,” said Bavaria’s Finance Minister Albert Füracker (CSU) of the German Press Agency in Munich. Solidarity and personal responsibility would have to balance each other out again in the financial power equalization, as the state financial equalization is officially called today.

The Free State is calling for a new regulation, as it has been carrying by far the greatest burden in the equalization system for years. Around 18.5 billion euros were redistributed between the 16 federal states last year. Bavaria paid in almost 9.9 billion euros.

According to the statement by the Federal Ministry of Finance, Baden-Württemberg paid almost 4.5 billion euros, and Hesse paid 3.25 billion euros. Hamburg contributed around 814 million euros and Rhineland-Palatinate around 107 million euros. Eleven countries, on the other hand, benefited from compensation payments. Berlin was the largest recipient with around 3.6 billion euros.

Bavaria complains about many injustices

“In Bavaria, we consider parts of the current financial power equalization system to be unconstitutional; there are many injustices in the existing equalization system, especially to the detriment of Bavaria, so that the system must be put to the test,” stressed Füracker. The lawsuit does not mean the end of Bavarian solidarity. “Rather, it is the necessary step in order to actually redesign a compensation system that is based on solidarity in a balanced and fair manner.” Since the fiscal equalization system was in place, Bavaria has received EUR 3.4 billion in the early years, but has now paid in more than EUR 108 billion.

“We can no longer convey to the taxpayers in our state that Bavarian taxpayers’ money is used to finance feel-good programs in other states via the equalization of financial power, which we in Bavaria cannot afford ourselves,” said Füracker. In the other federal states, Bavaria’s threat to sue had already been heavily criticized in the past few weeks.

In 2013, Bavaria – together with Hesse – had already filed a lawsuit against the state financial equalization system at the time. At that time, too, the lawsuit was decided within sight of the Bavarian election. The two states then withdrew their lawsuit in 2017 after the financial relations between the federal and state governments had been reorganized. The system serves the goal anchored in the Basic Law of creating equal living conditions in Germany. Unlike back then, Bavaria is alone with its lawsuit this time – although Söder’s counterparts from Baden-Württemberg and Hesse also consider the current equalization system to be in urgent need of reform.