The federal states are demanding more speed from the federal government in the negotiations on financial equalization and the associated reforms in the areas of health and care.
This should be wrapped up by the end of the year, a simple extension like last time shouldn’t be allowed, according to the provincial governors Hans Peter Doskozil (SPÖ, Burgenland) and Markus Wallner (ÖVP, Vorarlberg) and LH deputy Gaby Schaunig (SPÖ, Carinthia) after the meeting of the financial officers.
In order to ensure the best possible care for the population, a new distribution key in favor of the states and municipalities is needed, they referred to a unanimous decision by the state finance officers at the press conference in Stadtschlaining on Friday to the federal government. According to a WIFO study you cited, the spending dynamics have increased, especially in the areas of the federal states and municipalities such as health, care and education.
The current distribution key is 68 percent federal, 20 percent states and 12 percent municipalities. However, this no longer meets the current challenges. According to Doskozil, a shift of 8 percent to the federal states (then 25 percent) and municipalities (then 15 percent) is specifically required. According to the LH office, this would mean an annual plus of 5 billion euros for the federal states and 3 billion euros more for the municipalities.
The state finance officers did not want their decision to be understood as an ultimatum to the federal government. However, Doskozil emphasized: “We must strive to ensure that the entire complex is finalized by the end of the year.” Wallner also explained: “There are no ultimatums, but by the end of the year it has to be a done deal.” The extension by two years of the last financial equalization was due to the corona pandemic: “Now a simple extension is out of the question.”
The Burgenland governor complained that “very little has happened” in care, for example: “If you want to complete the financial equalization this year, it will be difficult to initiate reforms”, after all, the necessary federal measures are also needed. It can’t just be about talking about more money, structural reforms are much more needed. Doskozil hopes that this will happen on May 15th in a first meeting before the conference of health experts. “But it will be very tight if you want to bring the financial equalization over the stage.” He emphasized: “When we talk about the distribution of tax funds, then it should also be emphasized that these are not federal funds, but taxpayers’ funds.”
The tax revenue takes place in nine federal states, so it also needs to be distributed fairly among the local authorities, Wallner also explained and demanded: “One-sided shifting of burdens must stop.” The financial equalization sets the course for years to come and stands for planning security: “We need guidelines that we can set ourselves and within which we can move when expanding health, care and childcare.” In the health sector, for example, the federal states are already implementing a number of things, he referred to hospitals with a focus or the reduction in beds. “You have to get going now,” concrete negotiations are needed, he also urged, referring to the necessary preparation for federal interventions.
Schaunig also pointed out that the expenditures of the federal states and municipalities are increasing, but that of the federal government does not have this dynamic: “This must be taken into account when allocating the financial resources.” It’s not about asking for more money, but about ensuring that the population’s supply is secured: “It’s about elementary questions for the people.” She insisted on speedy negotiations because the countries had already done their work. “Our demands are moderate,” says Schaunig.
According to Wallner, further topics of discussion in the round were the universities of applied sciences – more support is needed here in countries without a large full university – and the demand for an extension of the threshold value regulation. According to the Vorarlberg governor, this should secure regional orders.
Brunner warns countries to exercise restraint
Finance Minister Magnus Brunner (ÖVP), as a negotiating partner on the federal side, countered on Friday and repeated his already well-known statement that simply demanding more money is not yet a negotiating position. “Financial equalization is a give and take, and not just a take from the federal government,” he said on the Treasury Department’s “Finance Friday” podcast. Actually, the financial equalization provides that the federal government is entitled to two-thirds and the states, municipalities and cities to around one-third of all common federal taxes. “After three years of crisis, this relationship has shifted significantly,” he emphasized.
For example, the federal government has increased the revenue shares of the municipalities by 675 million euros at the expense of the federal government, but also adopted parts of the tax reform 2020 and the eco-social tax reform through key changes, which accounts for a further 400 million euros. It is also a fact that the federal government “absolutely bore the brunt of crisis management” and spent a lot of money to cushion the crisis. “The financial situation of the federal states and municipalities is also quite stable after three years of crisis, precisely because of this approach,” emphasized the finance minister. At the same time, the costs of the past also limited the federal government’s scope for the future.
Vienna wants money for subway expansion
Another demand came from the state of Vienna on Friday: City Councilor for Finance Peter Hanke (SPÖ) wants to talk to the federal government about financing the subway expansion, where there is a 50:50 split in the costs. This was only confirmed by the National Council in November for the fourth and fifth expansion stages, with total costs of 5.741 billion euros. But the problem now is inflation. The construction cost index in civil engineering has risen by 20 percent within a year, Hanke explained to the “standard”. “Even under Finance Minister Gernot Blümel, we installed an additional component: If inflation is higher than two and a half percent for three years, this has to lead to negotiations. We’ll take care of that after the financial equalization negotiations,” said the city council.
