This is because the so-called connectivity principle, according to which local authorities must also be provided with adequate funding for tasks transferred to them, only applies at state level - not to the assumption of tasks by the federal government. This was recently confirmed by a legal opinion commissioned by the state capital Stuttgart from Würzburg constitutional law expert Professor Kyrill-Alexander Schwarz. This fact is causing increasing difficulties for local authorities throughout Germany. For this reason, mayors from Stuttgart to Kiel, from Saarbrücken to Dresden have now made an urgent appeal to the federal and state governments.
Financing deficit of 24.8 billion euros
Municipal funding has fundamental structural problems: Tasks are being transferred without adequate financial compensation. This leads to ever-increasing burdens on municipal budgets. In 2024 alone, the municipal funding deficit was 24.8 billion euros - the highest figure since 1990. The main drivers are rising social expenditure (particularly social welfare, child and youth welfare and integration assistance) and growing personnel costs as a result of pay rises. Around 95 percent of these social costs are borne by districts, independent cities and municipal associations.
In addition, local authorities are underfunded in areas such as hospital operations and public transport (Germany ticket). The gap between municipal income and expenditure is therefore widening. Against this backdrop, the city leaders of the capital cities of the federal states reaffirm the repeated demands of the Association of German Cities and the other municipal umbrella organizations and, for their part, call on the federal and state governments to observe the following principles in the upcoming reorganization of municipal funding:
Principle 1: Whoever orders must pay
We call on the Federal Government to provide for full and appropriate compensation from the outset in any draft legislation that entails future burdens on municipal resources.
Principle 2: Anyone who has ordered without paying must do so later
We call on the Federal Government to submit a draft bill to adjust the municipal share of VAT in such a way that existing additional burdens are offset by federal legislation. If this is not possible, the municipalities must be relieved by amending legislation.
Excessive municipal cash advances, which are demonstrably caused by inadequate financing of transferred tasks, must be taken over by the federal and state governments.
Principle 3: No agreements to the detriment of third parties
We call on the state governments to only approve counter-financed federal laws in the Bundesrat in future if municipal funding is secured. New burdens must be implemented through state law so that the state constitutional connectivity rules apply. This also applies to resolutions passed by the Conference of Minister Presidents.
Do not leave the bill to the municipalities
In addition to the joint press release from the state capitals, Stuttgart's Lord Mayor Dr. Frank Nopper commented: "A simple principle applies: if you order, you have to pay. And those who have ordered without paying must pay in arrears. If the federal government decides on new tasks or services, it must not leave the bill to the municipalities," says Dr. Nopper.
Lord Mayor Dr. Frank NopperWe demand that any future draft legislation that imposes additional burdens on cities and municipalities must provide for full and appropriate financial compensation from the outset. After all, weakening the municipalities jeopardizes trust in democracy.
