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Big windfall for Saarland: Federal government covers 155 million euros!
On June 24, 2025, the federal and state governments reached a compromise to finance the growth booster, which will relieve pressure on Saarland.
Big windfall for Saarland: Federal government covers 155 million euros!
Today, June 24, 2025, there is positive news for the municipalities and states of Germany. Saarland.de reports that the federal government and the federal states have reached a compromise on financing the so-called “growth booster”. This initiative by Federal Finance Minister Lars Klingbeil aims to reduce the financial burden on municipalities and promote investment.
Specifically, the federal government will cover the municipalities' shortfall in revenue in full from 2025 to 2029. This will provide considerable relief for the municipalities, while the states will only be partially compensated for their loss of revenue. Finance Minister Jakob von Weizsäcker emphasized the comprehensive compensation for the municipalities and the partial compensation for the states. This means that the federal government will raise a total of around 13.5 billion euros by 2029.
Additional investments in education and infrastructure
To promote economic recovery, the federal government has launched a new program. N TV reports that this investment program will provide incentives for investments. These include expanded tax depreciation options for machinery and electric vehicles, which are intended to help stimulate economic performance. A reduction in corporate tax from 2028 is also planned.
The prime ministers of several federal states have already demanded that the federal government compensate for the financial losses that could arise from this program. Lower Saxony's Prime Minister Olaf Lies emphasized that a solution must be found quickly, as many municipalities suffer from high levels of debt. It is hoped that a proposal for financial compensation will be available by the next Bundestag decision, as the Bundesrat's approval is expected on July 11th.
Long-term support for financially weak municipalities
An earlier initiative was the infrastructure program under the Municipal Investment Promotion Act, which was funded with 3.5 billion euros between 2015 and 2024. According to that Federal Ministry of Finance This program has made a significant contribution to stimulating investment activity in financially weak municipalities.
By the end of 2024, 99.5% of federal funds have been drawn down, and the success is reflected in the increased investment spending by the supported municipalities. These rose by an impressive 77% between 2015 and 2023. It was an important step for these municipalities to invest in the future and improve critical infrastructure.
The current compromise towards financial relief represents a reduction in the burden for Saarland by around 23 million euros annually, which adds up to 92 million euros over four years. This is a welcome step for the Saarland municipalities, which can expect complete compensation for lost income of a forecast 155 million euros.
Overall, the federal government is ready to give local and state governments a helping hand in order to get out of the current economic situation together. It remains to be hoped that the upcoming decisions in the Bundestag will be made quickly and for the benefit of the entire community.