Municipal protective umbrella

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The municipal protective shield is a program run by the State of Hesse to partially discharge the over-indebted communities and districts. The relief of the municipalities should amount to 2.8 billion euros for repayment and 400 million euros for interest subsidies. In the following years, a number of other federal states took this path of consolidation aid. The Hessian program is unique in Germany because of its high direct debt relief effect.

Background: financial situation of the municipalities

According to § 92 HGO , the municipalities should show balanced budgets. In practice, this regulation is not complied with by all rural districts and the vast majority of municipalities. The municipal finances fluctuate economic situation significantly. The trade tax in particular is very prone to fluctuations. However, even in times of economic boom, the majority of municipal budgets are currently in deficit . The deficits are financed through cash loans .

As of December 31, 2009 there were deficits of around 4.3 billion euros in the Hessian municipal budgets. In 2010 an additional 1 billion was added. Accordingly, as of December 31, 2010, cash advances of around 4.9 billion euros had been drawn down.

Background: Constitutional situation

According to Article 137 (5) of the Constitution of the State of Hesse , the state has to "secure the municipalities and associations of municipalities the funds necessary to carry out their own and assigned tasks by way of burden and financial compensation." The background to this is the regionally very different financial strength of the municipalities. This regulation is implemented in the municipal financial equalization scheme .

With the law of October 18, 2002, Article 137 was expanded to include the principle of connectivity . According to this, the state has to provide additional funds for additional tasks.

The program

In an agreement between the central municipal associations and the state of Hesse, the rules are described how the most heavily indebted municipalities are identified and how the relief is to take place.

Municipalities in need are identified using a set of key figures: the level of cash advances in euros per inhabitant as well as an ordinary result in euros per inhabitant based on a multi-year average. The authorized municipalities can apply for help, but are not obliged to do so.

106 of the 426 Hessian regional authorities are then entitled to apply. This includes 89 cities and municipalities belonging to the district, 14 districts and the three independent cities of Darmstadt , Offenbach am Main and Kassel .

The amount of debt relief amounts to 46% of the volume of regular loans and cash advances of the local authority as of December 31, 2009; Loans taken out after this point in time are not taken into account. The debts are taken over by the Hessen Economic and Infrastructure Bank . The State of Hesse is responsible for the repayment of the redeemed municipal loans and additional interest subsidies of up to 2% staggered according to the term of the agreement.

In order to avoid the municipalities that have been relieved from suffering again, the participating municipalities must agree with the state on consolidation targets and concrete consolidation measures that ensure budget balance in the long term.

The state will set up an early warning system that in the future will identify municipalities that are at risk of becoming over-indebted.

Political discussion

A number of aspects have been criticized by the opposition in the political debate:

The obligation to balance the budget after debt relief means that municipalities have to make cuts and revenue improvements in line with the structural deficit. This often means a need for consolidation in the amount of 10% of the budget volume and more. It is questioned whether all the beneficiary municipalities will participate under these circumstances.

The need to agree the consolidation plans with the country is criticized as an interference with the autonomy of the municipalities.

Implementation status

Protective umbrella municipalities (excluding districts) Legend: red = participation refused, yellow = application submitted, green = contract signed (status: February 14, 2013)

On June 29, 2012, the deadline for submitting an application to participate in the "communal protective umbrella" expired. Of the 106 municipalities entitled to apply (14 rural districts, three urban districts and 89 cities and municipalities belonging to the district), 102 have submitted an application. Only the four municipalities of Biebesheim am Rhein , Bischofsheim , Neuberg and Florstadt have refrained from submitting an application; despite the original application, the community of Schmitten does not participate in the protective umbrella program. After examining the applications by the responsible supervisory authorities, the State of Hesse concluded individual agreements with the protective umbrella municipalities, which were decided by the responsible representative bodies of the districts, cities and municipalities concerned by the end of December 2012.

The North Hessian community of Frielendorf was the first protective umbrella municipality to sign the agreement on participation in the protective umbrella program. These agreements specify the period (usually between 2 and 4 years) and, via a precisely defined reduction path, the measures (usually reducing expenditure and increasing income) over which the respective districts, cities and municipalities achieve a balanced budget have to. They then have to hold this for another 2 years.

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Individual evidence

  1. ↑ of the countries. A rocky road with an uncertain end. ( Memento of the original from May 5, 2016 in the Internet Archive ) Info: The archive link was inserted automatically and has not yet been checked. Please check the original and archive link according to the instructions and then remove this notice. Bertelsmann Foundation website. Retrieved May 5, 2016. @1@ 2Template: Webachiv / IABot / www.bertelsmann-stiftung.de
  2. Framework agreement between central municipal associations and the state government on a municipal protective umbrella in Hesse
  3. GVBl. I p. 628
  4. Ministry of Finance Hesse (2012): Framework agreement between central municipal associations and the state government on a municipal protective umbrella in Hesse PDF
  5. Schmitten is too unsafe under the protective umbrella - report in the "Taunus Zeitung" from September 28, 2012
  6. Municipal protective umbrella: Frielendorf is Hesse's number 1! - Press release from the Hessian Ministry of Finance  ( page no longer available , search in web archivesInfo: The link was automatically marked as defective. Please check the link according to the instructions and then remove this notice.@1@ 2Template: Toter Link / www.hmdf.hessen.de