Neustadt Administrative Court dismisses lawsuits against municipal financial equalization

For now, clarity about the municipal financial equalization (KFA) in Rhineland-Palatinate: The administrative court in Neustadt/Weinstrasse dismissed the lawsuits brought by the city of Pirmasens and the district of Südwestpfalz against the KFA. The court initially did not provide a reason. However, an appeal to the Koblenz Higher Administrative Court was permitted.

The two municipalities had hoped that their lawsuits would clarify the question of whether the design of the financial equalization meets the constitutional requirements. The lawsuits were filed in close coordination with the city council and the Rhineland-Palatinate district council. The two municipal umbrella associations themselves are not entitled to sue.

Almost two thirds of municipalities have a deficit

Rhineland-Palatinate municipalities have been complaining about inadequate financial resources for years. According to information from the Association of Cities and Districts, 64 percent of municipalities were planning a deficit for 2026.

Those responsible for the municipal umbrella associations expressed disappointment after the decision. The municipal financial situation was not as appreciated by the court as hoped, said the district council's finance department head, Jürgen Hesch. However, the two plaintiffs have already announced that they want to appeal the decision. This will then go to the Higher Administrative Court. “And of course we hope for a more positive decision there for us.”

Land prepares for appeal

The entire dimension of the case had not been sufficiently appreciated, said the managing director of the Association of Cities, Michael Bleidt. "Namely the fact that all municipalities in Rhineland-Palatinate are financially on the brink and even after the state's last debt relief measure, nothing has improved structurally." However, this structural improvement and the question of whether the state is responsible for ensuring that the municipalities are adequately provided with financial resources for their mandatory tasks are crucial.

The Ministry of Municipalities, on the other hand, appeared satisfied: With the dismissed lawsuits, the administrative court shares the state's opinion that the municipal financial equalization and the state financial equalization law, which was revised as of January 1, 2023, are in line with the state constitution. However, the state assumes that the city of Pirmasens and the district of Südwestpfalz will appeal to the Koblenz Higher Administrative Court, said a spokesman for the Ministry of Local Government.