Municipal Finances: Takeover of Legacy Debts Only Possible with Constitutional Amendment

An expert opinion states that the federal government cannot take over municipal legacy debts without a constitutional amendment. The Federal Ministry of Finance proposes a joint takeover by the federal and state governments, which would also require a constitutional amendment.

It is uncertain whether the debt takeover would fall under the debt brake. The SPD, Greens, and FDP had agreed to provide assistance for municipalities with high overdraft facilities, primarily in North Rhine-Westphalia, Saarland, and Rhineland-Palatinate.

However, the Union and some states like Bavaria reject a constitutional amendment. The FDP politician demands that the CDU must give in to make progress.

The report was first published in the Rheinische Post.