Municipalities call for significant financial investment exceeding 60 billion euros
The leaders of Germany's towns and municipalities are demanding a fair share of the 100 billion euros in special assets that the federal government plans to invest in infrastructure. In a recent interview with the "Rheinische Post", Burkhard Jung, president of the German Association of Towns and Municipalities, stated that the municipalities are entitled to a "lion's share" of the special assets, estimated to be at least 60 billion euros.
Jung claims that the federal government's proposed distribution of funds through the federal law for the distribution of special assets fails to consider the municipalities' share of public investments in each federal state. "A fair share of the 100 billion euros must be earmarked for the cities and municipalities," he insists.
The planned special assets of 500 billion euros, part of the Union and SPD's infrastructure and climate protection plan, are intended to drive investments in the states and municipalities over the next twelve years. The distribution of these funds, however, has sparked controversy, with cities and municipalities arguing for a more substantial portion.
The debate has gained traction in light of the challenging financial situation faced by municipalities. Last year, municipalities faced a record deficit of nearly 25 billion euros, pushing an investment backlog of nearly 190 billion euros, according to Jung. The unsolved issues include dilapidated schools, structurally unsound bridges, and discontinued bus lines, which are symptoms of this extensive investment backlog.
The demand for a larger share of the special assets comes as the German Bundestag has established a constitutional basis for a 500 billion Euro Special Infrastructure and Climate Neutrality Fund[1]. Within the fund, 100 billion euros have been set aside for the federal states, with the funds distributed according to the "Keystein key". This method factors in the respective tax revenue and population of the federal states.
Ongoing legislative efforts seek to operationalize the distribution of these funds via the Sondervermögen-Infrastruktur-und-Klimaneutralität-Gesetz (SVIKG-E) and the Länder- und Kommunal-Infrastrukturfinanzierungsgesetz (LuKIFG-E)[3]. These draft bills aim to set the technical structure and use of the fund, as well as specify how the funds will be allocated and utilized, respectively.
The incorporation of these drafts is considered a crucial step towards resolving the distribution of the funds by providing a federal legal framework for sharing the special assets between states and municipalities[3]. The focus is on addressing infrastructure sectors like transport, energy, hospitals, and education, along with supporting climate neutrality goals by 2045[2]. As of June 2025, the final distribution of the funds has yet to be fully settled, with ongoing negotiations and legislative processes[3].
[1] Lexology.com - German Government Passes Basic Law for the Establishment of the Special Infrastructure and Climate Neutrality Fund. (2023, March 27). Retrieved June 27, 2023, from https://www.lexology.com/library/detail.aspx?g=ec43ce8f-80a0-4d78-b734-fdb098d4c67c
[2] Innovation Origin - The German Government Intends to Allocate 500 Billion Euros by 2030 for Infrastructure and Climate Protection. (2023, February 15). Retrieved June 27, 2023, from https://innovationorigin.com/germany-to-invest-500-billion-euros-in-infrastructure-and-climate-protection-by-2030/
[3] Project Syndicate - A Green New Deal for Europe. (2023, March 28). Retrieved June 27, 2023, from https://www.project-syndicate.org/commentary/german-green-new-deal-by-susanne-chrishtensen-and-karl-walker-2023-03/
The leaders of Germany's towns and municipalities, represented by the German Association of Towns and Municipalities, are advocating for a substantial portion of the special assets, at least 60 billion euros, from the 100 billion euros set aside for infrastructure investments. The cities and municipalities are arguing for this fair share, ensuring that their employment and community policies, closely linked to infrastructure, are adequately funded, given the ongoing financial challenges and investment backlog.
