The initiative is reminiscent of the behavior of helpless parents who, as a last resort, want to deprive their naughty offspring of their pocket money. Baden-Württemberg's Finance Minister Danyal Bayaz (Greens) recently brought financial penalties into play for a possible AfD government after the elections in Saxony-Anhalt.
The state financial equalization is regulated by the constitution, and a federal state based on solidarity lives from “common constitutional principles,” wrote Bayaz on the short message service
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Bayaz is aimed at the instrument with which money is redistributed between the federal states. Some have to accept sales tax deductions, others receive surcharges - depending on their financial strength. A total of 20 billion euros went to the others from the four donor states Bavaria, Baden-Württemberg, Hesse and Hamburg last year. Saxony-Anhalt received almost two billion euros.
However, it is not possible to cut these funds because you don't like the party color of the local government. The law also stands before other paternalistic money-stop fantasies. Experts see an approach, but it requires patience.
“Financial equalization is not a means of political discipline to bring a country into line,” says constitutional lawyer Kyrill-Alexander Schwarz from the University of Würzburg.
The general means of financial equalization are not subject to any earmarking. A receiving country can do whatever it wants with it. The Federal Ministry of Finance also points this out. The law was passed jointly by the federal and state governments. “The benefits are legally defined within the framework of the Financial Equalization Act, to which the federal government is bound,” says Lars Klingbeil (SPD).
Saxony-Anhalt receives 450 million euros annually
In addition to tax distribution, there are support programs and direct financial aid that could be used as a means of pressure. A state like Saxony-Anhalt benefits - just like other federal states - from many well-filled pots of money: In the current year, according to the state finance ministry there, Saxony-Anhalt will receive around 450 million euros from the federal government's special "infrastructure and climate neutrality" pot. In order to master the structural change in the lignite mining area, 143 million euros will be transferred.
Saxony-Anhalt receives 78 million euros to promote the economy in structurally weak regions (GRW program), 44 million euros for agriculture and forestry, and 27 million euros for urban development funding. But the same applies here: “A unilateral reduction or deletion is not possible,” says the CDU-led ministry in Magdeburg. After all, such federal payments are based “mainly on (basic) legal basis”, on administrative agreements and other legal bases.
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There would be legal leverage. The federal government could not exclude the state of Saxony-Anhalt from funding programs, but it could set the funding criteria in such a way that fewer companies and institutions there might benefit. "In general, the principle of federal equal treatment applies. Fund cuts must therefore always be justified in a specific factual context," says constitutional lawyer Hanno Kube from the University of Heidelberg.
A program could be tailored so that it is less suited to Saxony-Anhalt. Some financing rules also expressly provide for funds to be withheld or reclaimed if they fail to achieve their intended purpose. For the state share of the special infrastructure fund, for example, the federal government was granted reporting obligations and audit rights - including the right to reclaim funds.
A country cannot be excluded from funding because the wrong party is supposedly in power there. That would be unconstitutional. However, the federal government can put one federal state in a worse position than others through the specific design of the funding programs - but this cannot happen from one day to the next. The effect would appear gradually.
Political opponents also like to refer to Article 37 of the Basic Law: With the so-called federal coercion, the federal government can, with the consent of the Bundesrat, force a non-cooperative country “to fulfill its obligations”. This article is often referred to as the “nuclear option” of federalism. It has never been used since the founding of the Federal Republic. "Article 37 specifically requires that a country violates obligations; a different national policy is not enough," says lawyer Schwarz. There must actually be violations of the law. His colleague Kube also sees a high hurdle: “The prerequisite is that the state has actually violated an obligation imposed by federal law,” he says.
As an example, Kube cites the obligation to guarantee public broadcasting. The AfD has announced that its “first official act” will be to terminate the state broadcasting contracts and to replace the Mitteldeutscher Rundfunk with a basic radio station. But Kube does not assume that this is enough to exercise federal coercion. If the state fulfills the universal service mandate in another way, the termination of the broadcasting treaties would be legal. “That seems difficult, but it remains to be seen,” says Kube. Nothing happens quickly. A state government would certainly take legal action against any kind of intervention before the Constitutional Court.
This article was created for WELT and “Business Insider Germany”.
Karsten Seibel is a business editor in Berlin. Among other things, he reports on budget and tax policy.
