While Chancellor Olaf Scholz (SPD), Economy Minister Robert Habeck (Greens) and Finance Minister Christian Lindner (FDP) continue to discuss intensely how they should solve the big problem of the 2024 federal budget, the next bad news hits them : The Federal Audit Office comes out in a statement to a hearing at the Bundestag Budget Committee this Tuesday concluded that subsequent reparations to the 2023 federal budget may also be unconstitutional.
Remember: the Federal Constitutional Court ruled on November 15 that the reallocation of unused Corona aid funds worth €60 billion to a climate and transformation fund (KTF) was unconstitutional.
Federal Audit sees “a constitutional risk”
Consequently, the Economic and Stabilization Fund (FSM) with the brakes on electricity and gas prices was interrupted; The funds financed from this, as well as the billions of dollars in aid to victims of the flood catastrophe in the Ahr Valley, will now be subsequently financed through the federal budget. As this violates debt brake requirements, an emergency situation was subsequently declared for the current year due to the war in Ukraine and a week ago the cabinet decided on a supplementary budget for 2023, which experts have now commented on. .
Ministerial Advisor Jan Keller, from the Federal Audit Office, states in his statement that it cannot be excluded “that the retroactive authorizations provided for in the 2023 supplementary budget could conflict with Parliament’s budget law and therefore pose a constitutional risk ”.
Although the Federal Constitutional Court does not expressly take a position in its ruling on whether an emergency resolution can also be taken retroactively, the ruling contains comments on the nature of emergency resolutions that can be used to assess whether a retroactive emergency resolution was admissible.
Thus, the resolution defines an emergency in such a way that, from the Bundestag’s point of view, it challenges the State’s capacity for action and must be managed as a crisis. At the same time, the emergency resolution must not only describe the emergency situation in a transparent way, but also have a warning and, above all, a verification function for the budget legislator with regard to exceeding the credit limit. Both functions are fundamentally opposed to the subsequent declaration of the emergency situation and the subsequent legitimization of loans already taken out: “It is no longer possible to alert to facts that have already been created and Parliament’s examination of the need to take out loans would also lead to nothing from the beginning.”
It is also considered a significant error that not all special funds are taken into account annually when taking out loans and the effects on the debt rule. “In the opinion of the Federal Court of Auditors, the federal government’s calculation of indebtedness that is relevant to the debt rule is therefore incomplete,” says Keller’s statement. This means that the upper limit of the debt rule will still be “significantly exceeded” by 14.3 billion euros, even with the supplementary budget planned for 2023.
The traffic light has almost no alternatives to the emergency situation in 2023
However, the traffic light coalition has the problem that there is no way other than the subsequent emergency that can be taken to not have presented a budget for the current year that is unconstitutional from the start. So far there have been no announcements of legal action against the supplementary budget, which the Bundestag and Bundesrat are expected to decide before the turn of the year.
The Federal Auditor’s Office’s many special funds have long been a thorn in the side of the federal government because, from the authority’s point of view, they obscure the state’s true debt situation. The Court of Auditors also harshly criticized the new traffic light reservation technology for borrowing special funds in a report sent to the Ministry of Finance at the end of August.
Context: In its law for the 2021 supplementary budget, Traffic Light decreed that such special funds count towards the debt brake in the year they are filled – not the year the loans are used. From a traffic light perspective, the extremely practical consequence: When the Ahr Valley Fund, the Climate Fund and the Economic Stabilization Fund were filled, the debt brake was lifted anyway. However, from the government’s point of view, it is still necessary to analyze whether the Karlsruhe decision also has an impact on special assets that were not filled with emergency loans.
Other experts see fewer problems
Unlike the Federal Audit Office, constitutional lawyer Hanno Kube, who represented the Union faction in its case in Karlsruhe, praised the federal government. It is “welcome” that the government is taking advantage of the short time until the end of the year to “subsequently bring the 2023 budget into line with the constitution”, writes Kube in his statement for Tuesday’s hearing -fair. The government’s measures are an “understandable reaction” to the Federal Constitutional Court’s decision; especially the 60 billion canceled from the climate fund.
Unlike the Court of Auditors, Kube also considers it understandable “given the urgency of concluding the supplementary budget legislative process” that the government still has to examine the possible effects of the decision on special funds in addition to the economic stabilization fund and the fund special fund for people affected by the Ahrtal disaster.
But Kube is also of the opinion that the subsequent emergency decision raises “questions”. In principle, such an emergency decision must be taken “before the start of the relevant financial year”. However, the constitutional budget law also recognizes the instrument of the supplementary budget, which responds to the financing needs of the current year. It should be taken into account “that the decision of the Federal Constitutional Court, taken at the end of the 2023 budget year, led to an exceptional situation”, said Kube. Overall, he therefore considers the government’s approach – both the supplementary budget and the retroactive emergency resolution – to be justifiable.
In its statement, the Federal Court of Auditors emphasizes that it is now necessary to further ensure “that the planning of the 2024 budget is beyond any constitutional doubt”. This is again the topic of ongoing negotiations.
Companies in a climate of alarm – Scholz is threatened by a turbulent SPD party conference
The SPD in particular would like to reach a fundamental agreement at this Wednesday’s Federal Cabinet meeting on whether an emergency should be declared again in 2024 because of the war in Ukraine and its consequences and the debt brake should be lifted. However, the FDP asks that around 17 billion euros in savings potential be defined – in the social sector, for example, the increase in citizens’ money by twelve percent from January 2024 should be waived.
The SPD is also increasingly dissatisfied with Chancellor Scholz ahead of the federal party conference starting on Friday because it obviously had no plan B for the verdict. Controversial debates are expected at the party conference. Many companies and industry are in a state of alarm due to the lack of clarity regarding financing commitments for the transformation towards a more climate-friendly economy, as is highlighted in national circles. Many of the hydrogen projects classified as central could now be canceled – which could put a large number of jobs at risk.
This is also why the Social Democrats want a quick and clear agreement in December, so that the 2024 budget is ready at the beginning of the year. However, the cabinet would have to make a decision this Wednesday so that the Bundestag and Bundesrat resolutions would be possible before the turn of the year.